The Distribution Sector and the Development Process: Are There Patterns? Yes
In this paper we bring together three different strands of literature to raise and answer the question posed in the title. The literature in the Kuznets tradition applied to services raises the question of whether the pattern observed for services, namely a rising share of GDP, is also observed for the distribution sector. The literature on the retail and wholesale sector, on the other hand, indicates the existence of economies of scale in the provision of the distribution services that constitute a main output of this sector. Hence, one would expect a different pattern for distribution than for services because the standard assumption in explaining the pattern for services is that the services sector experiences constant returns to scale. By linking the literature on economic development and specialization with the literature on the distribution sector, we can show that an inverted-U pattern between the share of distribution and the level of development should be expected to arise. We construct a cross-section time series data set for 74 countries using UN national income accounts data to calculate the share of retail and wholesale trade in GDP and merge this data set with the one used by Syrquin and Chenery (1989)to analyze the service sector in general. In contrast to their results for services, we find an average time series relation between the share of distribution and the level of development that exhibits an inverted-U pattern with respect to the level of development. We also analyze the average cross-section (country) relation between the share of distribution and the level of development. In contrast to the results of Kravis, Heston and Summers(1983) for services, we also find an inverted-U pattern between the share of distribution and the level of development in this setting.
|Date of creation:||Aug 1999|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.econ.umd.edu/
|Order Information:|| Postal: Ms. Elizabeth Martinez, Department of Economics, University of Maryland, Tydings Hall, College Park, MD 20742|
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.:
- Anand, Sudhir & Kanbur, S. M. R., 1993. "Inequality and development A critique," Journal of Development Economics, Elsevier, vol. 41(1), pages 19-43, June.
- Betancourt, Roger R. & Gautschi, David, 1992. "The demand for retail products and the household production model : New views on complementarity and substitutability," Journal of Economic Behavior & Organization, Elsevier, vol. 17(2), pages 257-275, March.
- Locay, Luis, 1990. "Economic Development and the Division of Production between Households and Markets," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 965-82, October.
- Bardhan, Pranab, 1996.
"Disparity in wages but not in returns to capital between rich and poor countries,"
Journal of Development Economics,
Elsevier, vol. 49(1), pages 257-270, April.
- Pranab Bardhan., 1993. "Disparity in Wages but not in Returns to Capital between Rich and Poor Countries," Center for International and Development Economics Research (CIDER) Working Papers C93-017, University of California at Berkeley.
- Ofer, Gur, 1973. "Returns to Scale in Retail Trade," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 19(4), pages 363-84, December.
- Antonio Ciccone & Kiminori Matsuyama, 1992.
"Start-up Costs and Pecuniary Externalities as Barriers to Economic Development,"
1031, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Ciccone, Antonio & Matsuyama, Kiminori, 1996. "Start-up costs and pecuniary externalities as barriers to economic development," Journal of Development Economics, Elsevier, vol. 49(1), pages 33-59, April.
- Antonio Ciccone & Kiminori Matsuyama, 1993. "Start-Up Costs and Pecuniary Externalities as Barriers to Economic Development," NBER Working Papers 4363, National Bureau of Economic Research, Inc.
- Antonio Ciccone & Kiminori Matsuyama, 1995. "Start-up costs and pecuniary externalities as barriers to economic development," Economics Working Papers 142, Department of Economics and Business, Universitat Pompeu Fabra.
- Antonio Ciccone & Kiminori Matsuyama, 1993. "Start-up costs and pecuniary externalities as barriers to economic development," Discussion Paper / Institute for Empirical Macroeconomics 83, Federal Reserve Bank of Minneapolis.
- Ciccone, A. & Matsuyama, K., 1993. "Start-Up Costs and Pecuniary Externalities as Barriers to Economic Development," Papers 533, Stockholm - International Economic Studies.
- Panagariya, Arvind, 1988. "A Theoretical Explanation of Some Stylized Facts of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 509-26, August.
- Roger Betancourt & Margaret Malanoski, 1999. "An Estimable Model of Supermarket Behavior: Prices, Distribution Services and Some Effects of Competition," Empirica, Springer, vol. 26(1), pages 55-73, March.
- Roger R. Betancourt, 1993. "An Analysis of the U.S. Distribution System," OECD Economics Department Working Papers 135, OECD Publishing.
- Walter Y. Oi, 1992. "Productivity in the Distributive Trades: The Shopper and the Economies of Massed Reserves," NBER Chapters, in: Output Measurement in the Service Sectors, pages 161-193 National Bureau of Economic Research, Inc.
- Rodriguez-Clare, Andres, 1996. "The division of labor and economic development," Journal of Development Economics, Elsevier, vol. 49(1), pages 3-32, April.
- Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
When requesting a correction, please mention this item's handle: RePEc:umd:umdeco:99-007. 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: (Peter Murrell)
If references are entirely missing, you can add them using this form.