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Vertical specialization, global expansion of supply chain, and convergence

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  • Beladi, Hamid
  • Marjit, Sugata
  • Oladi, Reza
  • Raei, Sepideh

Abstract

In this paper, we construct an elaborate general equilibrium model with a continuum of production fragments for an intermediate good, then incorporate 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 things, 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 further address the effects of such a trade opening on wage inequality.

Suggested Citation

  • Beladi, Hamid & Marjit, Sugata & Oladi, Reza & Raei, Sepideh, 2025. "Vertical specialization, global expansion of supply chain, and convergence," Macroeconomic Dynamics, Cambridge University Press, vol. 29, pages 1-1, January.
    • Handle: RePEc:cup:macdyn:v:29:y:2025:i::p:-_25
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