Trade, demand spillovers, and industrialization: the emerging global middle class in perspective

Alain Desdoigts () and Fernando Jaramillo

Cahiers de la Maison des Sciences Economiques from Université Panthéon-Sorbonne (Paris 1)

Abstract: Will the integration of BRIC (Brazil, Russia, India and China) into the global economy provide the biggest boost to the world economy since the industrial revolution ? In this paper, we investigate international demand spillovers brought about by an emerging global middle class and their impact on the international structure of production. We put forth a many-industry and two-country trade model featuring international competition, non-homothetic preferences and country-specific asymmetries in income distribution, productivity and population size. Its key characteristic is the introduction of demand complementarities propagating increasing returns across industries and national boundaries, which eventually translate into a global profit-multiplier.

Keywords: Horizontal complementarities; hierarchic preferences; world middle class; deindustrialization; trade. (search for similar items in EconPapers)
JEL-codes: F10 O11 O14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cis, nep-cwa, nep-dev, nep-int and nep-sea
Date: 2006-02, Revised 2007-07

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Related works:
Working Paper: Trade, demand spillovers and industrialization: The emerging global middle class in perspective (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:mse:wpsorb:v06014a

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