International Trade, Global Inequality and Specialization from a Political Economy Perspective

Clara Brenck () and Duncan Foley
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Clara Brenck: Department of Economics, New School for Social Research, USA

No 2303, Working Papers from New School for Social Research, Department of Economics

Abstract: In this paper we discuss possible explanations for persistent global inequalities from a political economy perspective. Different from what Smith and Marx assume in the long period method – that both capital and labor are fully mobile – we assume that labor is not mobile across regions. The lack of labor mobility is an important abstract problem to theorize about capitalist development in a globalized context. Including such assumption in the dual problem of consumption-growth and wage-profit rate, the model sheds light on some channels in which uneven development and specialization may occur: different wages and equalized profit rates can be achieved by different labor qualities or different access to technologies. If labor qualities are different, wage differences would represent only the difference in labor productivity and effective wages would be equalized, without any specialization. If technologies are different, on the other hand, specialization may occur, and trade is thus established. The lack of technological mobility can occur due to increasing returns to scale, product differentiation and different socioeconomic characteristics of countries.

Keywords: Long period method; labor mobility; global inequality; technological differences; specialization; trade (search for similar items in EconPapers)
JEL-codes: D30 E11 F12 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2023-02
New Economics Papers: this item is included in nep-hme, nep-int, nep-pke and nep-pol
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