Vertical Specialization, International Task Fragmentation, and Convergence

Sugata Marjit and Reza Oladi

No 9406, CESifo Working Paper Series from CESifo

Abstract: In this paper, we construct an elaborate general equilibrium model with a continuum of production fragments for an intermediate good, then embed it in a growth model to address the effects of global production fragmentation, vertical specialization and trade on growth and inequality for a small developing country. Among other results, we show that a small developing economy grows faster than the rest of the world as a result of global fragmentation and trade in intermediates if it is skilled-labor scarce. We also address the effects of such trade opening on wage inequality.

Keywords: vertical specialization; trade; growth; inequality (search for similar items in EconPapers)
JEL-codes: F10 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-gro and nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9406

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