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Globalisation, productive systems, and inequalities

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  • Duranton, Gilles

Abstract

Using the idea that the division of labor is limited not only by the extent of the market but also by its heterogeneity, it is proposed in this paper that ''globalisation'' is redrawing the lines of division within and between countries. Our model builds on the concept of productive systems. Our results indicate that progressive trade integration among ''similar'' countries lead first to disparities between countries and then to convergence between nations but also to inequalities within nations (thus possibly accounting for the deterioration of the labor market situation of the unskilled). It is also shown that trade integration among rich economies and/or rising skills therein can lead to the marginalisation of poorer countries (thus possibly accounting for the convergence of countries in the world economy towards a twin-peaked distribution and the delinking of some countries from the world trading system).

Suggested Citation

  • Duranton, Gilles, 1998. "Globalisation, productive systems, and inequalities," LSE Research Online Documents on Economics 20252, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:20252
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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