Abstract
This paper analyzes the roles of product quality and increasing returns in international division of labor and economic development. Because the qualities of different intermediate goods are highly complementary in producing the quality of the final good, a poor economy will choose to be in autarky if its average level of human capital is sufficiently low. Thus, the heterogeneity of human capital may hamper the division of labor. Further, by linking quality, trade and growth, this model simultaneously explains the East Asian Miracle and the empirical finding of conditional convergence.
Original language | English |
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Pages (from-to) | 271-291 |
Number of pages | 21 |
Journal | Journal of Economic Behavior and Organization |
Volume | 55 |
Issue number | 2 |
DOIs | |
Publication status | Published - 1 Oct 2004 |
Funding
sI am grateful to Yew-Kwang Ng for valuable comments and to Debra Dove for editorial help. All remaining errors are entirely my own.
Keywords
- Extent of the market
- Growth
- Heterogeneity of human capital
- Quality