Long-run effects of low-wage countries' growing competitiveness and exports of manufactures

Luciano Boggio

Structural Change and Economic Dynamics, 2009, vol. 20, issue 1, pages 38-49

Abstract: Previous work on this topic brought to light the possibility of a loss in income for the high-wage countries. Our two-country multicommodity Ricardo-Mill model extends this result to the n-good case but also shows the possibility of an offsetting income benefit, accruing to the high-wage country, if the low-wage country's productivity increases go beyond what is strictly necessary to reduce to zero the production of a good previously produced by the high-wage country. Alternative setups are also explored, in which in the low-wage country, along with a modern sector, a traditional sector exists, where workers' income is at subsistence level. If the reaction of wages of the former sector to permanent shifts of workers from the traditional subsistence sector to the modern one is sufficiently small, high-wage countries, instead of losing, will gain.

Keywords: Globalization; International; specialization; Catching; up; Productivity; growth; Less; developed; countries (search for similar items in EconPapers)
Date: 2009

Downloads: (external link)
http://www.sciencedirect.com/science/article/B6VFN ... c2025b34e613df3205a7
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:eee:streco:v:20:y:2009:i:1:p:38-49

Access Statistics for this article

Structural Change and Economic Dynamics is edited by F. Duchin, H. Hagemann, M. Landesmann, R. Scazzieri, A. Steenge and B. Verspagen

More articles in Structural Change and Economic Dynamics from Elsevier
Series data maintained by Heidi Boesdal ().