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Increasing returns and the international distribution of income

Author

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  • Alexandre De Zagottis

Abstract

The existence of increasing returns in high technology industries assigns a path dependent character to the international division of labor. Rich countries, first entrants in these industries, enjoy permanent advantages that prevent, in a free market environment, the development of such industries in middle-income countries. This dynamics allows the former group of countries to experience a higher growth rate of labor productivity than the latter, and, as a result, increases the gap between the workers’ standard of living in these countries. It is up to the States of middle-income countries the task of devising development strategies capable of breaking such pattern and improving the international distribution of income. JEL Classification: D62; F15; F43; O25; O38; O47.

Suggested Citation

  • Alexandre De Zagottis, 2008. "Increasing returns and the international distribution of income," Brazilian Journal of Political Economy, Center of Political Economy, vol. 28(3), pages 454-470.
    • Handle: RePEc:ekm:repojs:v:28:y:2008:i:3:p:454-470:id:537
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    File URL: https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/537/535
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    More about this item

    Keywords

    increasing returns; externalities; international division of labor; national strategy;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • F15 - International Economics - - Trade - - - Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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