Income Distribution, Market Size, and Industrialization
When world trade is not free and costless, a less developed country can profitably industrialize only if its domestic markets are large enough. In such a country, for increasing returns technologies to break even, sales must be high enough to cover the set-up costs, This paper studies some determinants of the size of the domestic market, and focuses on two conditions conducive to industrialization. First, agriculture or exports must provide the source of autonomous demand for manufactures. Such expansion of autonomous demand usually results from increases in farm productivity or from opening of new export markets. Second, income generated in agriculture or exports must be broadly enough distributed that it materializes as demand for mass-produced domestic goods, and not just for luxuries. We resort to these two determinants of the size of domestic markets to interpret several historical development episodes.
|Date of creation:||Sep 1988|
|Publication status:||published as "Income Distribution, Market Size and Industrialization" Quarterly Journal of Economics , August 1989.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Shleifer, Andrei & Vishny, Robert W, 1988.
"The Efficiency of Investment in the Presence of Aggregate Demand Spillovers,"
Journal of Political Economy,
University of Chicago Press, vol. 96(6), pages 1221-1231, December.
- Andrei Shleifer & Robert W. Vishny, 1987. "The Efficiency of Investment in the Presence of Aggregate Demand Spillovers," NBER Working Papers 2297, National Bureau of Economic Research, Inc.
- Shleifer, Andrei & Vishny, Robert W., 1988. "The Efficiency of Investment in the Presence of Aggregate Demand Spillovers," Scholarly Articles 3725553, Harvard University Department of Economics.
- Weitzman, Martin L, 1982. "Increasing Returns and the Foundations of Unemployment Theory," Economic Journal, Royal Economic Society, vol. 92(368), pages 787-804, December.
- Murphy, Kevin M & Shleifer, Andrei & Vishny, Robert W, 1989. "Industrialization and the Big Push," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1003-1026, October.
- Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1988. "Industrialization and the Big Push," NBER Working Papers 2708, National Bureau of Economic Research, Inc.
- Murphy, Kevin M. & Shleifer, Andrei & Vishny, Robert W., 1989. "Industrialization and the Big Push," Scholarly Articles 3606235, Harvard University Department of Economics.
- Oliver Hart, 1982. "A Model of Imperfect Competition with Keynesian Features," The Quarterly Journal of Economics, Oxford University Press, vol. 97(1), pages 109-138.
- Douglass C. North, 1959. "Agriculture in Regional Economic Growth," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 41(5), pages 943-951.
- Russell Cooper & John Andrew, 1985. "Coordinating Coordination Failures in Keynesian Models," Cowles Foundation Discussion Papers 745R, Cowles Foundation for Research in Economics, Yale University, revised Jul 1985.
- Judd, Kenneth L, 1985. "On the Performance of Patents," Econometrica, Econometric Society, vol. 53(3), pages 567-585, May.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:2709. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.