Fragmentation, Engel's Law, and Learning
Ai Ting Goh and
Henry Y. Wan Jr.
Post-Print from HAL
This paper outlines the conditions under which trade is beneficial for a developing country's growth. A developing country suffers from two disadvantages: low income and a comparative disadvantage in the production of modern manufactured goods--goods which allow a high rate of human capital accumulation through learning by doing. Low income together with Engel's law imply that developing countries consume and produce very few modern goods in autarky and hence grow slowly. With international fragmentation of production, a developing country may find comparative advantage in the production of some stages of modern goods despite an absence of comparative advantage in the production of modern goods under "100% local content." More resources can then be allocated to the modern goods sector leading to greater learning externalities and hence growth under free trade than in autarky.
Keywords: Fragmentation; Engel's law; Learning (search for similar items in EconPapers)
Note: View the original document on HAL open archive server: https://hal-hec.archives-ouvertes.fr/hal-00463403
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Published in Review of International Economics, Wiley, 2005, Vol.13,n°3, pp.518-528. ⟨10.1111/j.1467-9396.2005.00521.x⟩
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
Journal Article: Fragmentation, Engel's Law, and Learning (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00463403
Access Statistics for this paper
More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().