Technological Integration and Income Gaps

Carlos Ortiz and Javier Castro

Lecturas de Economía, 2008, issue 68, 217-247

Abstract: Leontief (1963) claimed that underdeveloped countries are poor because they are by far less economically diversified. This paper shows that a general equilibrium model with a stable input-output structure and a productivity externality due to input diversification may be consistent with Leontief´s hypothesis. An open economy version of the model yields the possibility of breaking the factor price equalization theorem so that developed economies enjoy higher capital remuneration and higher income level. Some empirical evidence on the relationship between technological integration and real income is provided.

Keywords: input-output; technological integration; income gaps; asymmetric technological structures; factor price equalization (search for similar items in EconPapers)
JEL-codes: C67 D57 F11 L60 O14 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (6)

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