Premium
THE INTERNATIONAL DEMONSTRATION EFFECT AND THE DOMESTIC DIVISION OF LABOUR: A SIMPLE MODEL
Author(s) -
Liu PoTing,
Sun GuangZhen
Publication year - 2005
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2005.00289.x
Subject(s) - underpinning , economics , division of labour , simple (philosophy) , division (mathematics) , endogenous growth theory , neoclassical economics , developing country , macroeconomics , international economics , market economy , economic growth , human capital , philosophy , civil engineering , arithmetic , mathematics , epistemology , engineering
. The implications of the international demonstration effect (IDE) for the development of underdeveloped economies have long been studied and debated. Yet few formal analyses exist in the literature, especially regarding its implications for the growth of domestic markets and the division of labour in developing economies. We offer an analysis of endogenous specialization under the IDE, the first of its kind, showing that, far more complicated than the scenario held by conventional wisdom, the IDE makes more difficult the emergence of the market underpinning the domestic division of labour, but facilitates the expansion of the market once it has been developed.