Nothing Special   »   [go: up one dir, main page]
Scribd Logo
Upload

Welcome to Scribd!

  • 59 views

    File 0062 PDF

    Uploaded by

    Ed Z
    This document discusses how acquiring human productivity (HP) in different industries can affect a country's wages. It argues that countries could increase wages the most by focusing their efforts on industries that have higher complexity, larger demand, and lower prevalence across countries. Under some conditions, acquiring HP in an industry with higher complexity, demand, or lower prevalence would increase a country's wages more than acquiring HP in another industry with lower complexity, demand, or higher prevalence. The document also relates this framework to arguments that countries producing "rich country goods" tend to be richer, as these goods provide more learning and technological upgrading opportunities.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    File 0062 PDF

    Uploaded by

    Ed Z
    59 views1 page
    This document discusses how acquiring human productivity (HP) in different industries can affect a country's wages. It argues that countries could increase wages the most by focusing their efforts on industries that have higher complexity, larger demand, and lower prevalence across countries. Under some conditions, acquiring HP in an industry with higher complexity, demand, or lower prevalence would increase a country's wages more than acquiring HP in another industry with lower complexity, demand, or higher prevalence. The document also relates this framework to arguments that countries producing "rich country goods" tend to be richer, as these goods provide more learning and technological upgrading opportunities.

    Original Description:

    Original Title

    File 0062.pdf

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document discusses how acquiring human productivity (HP) in different industries can affect a country's wages. It argues that countries could increase wages the most by focusing their efforts on industries that have higher complexity, larger demand, and lower prevalence across countries. Under some conditions, acquiring HP in an industry with higher complexity, demand, or lower prevalence would increase a country's wages more than acquiring HP in another industry with lower complexity, demand, or higher prevalence. The document also relates this framework to arguments that countries producing "rich country goods" tend to be richer, as these goods provide more learning and technological upgrading opportunities.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    59 views1 page

    File 0062 PDF

    Uploaded by

    Ed Z
    This document discusses how acquiring human productivity (HP) in different industries can affect a country's wages. It argues that countries could increase wages the most by focusing their efforts on industries that have higher complexity, larger demand, and lower prevalence across countries. Under some conditions, acquiring HP in an industry with higher complexity, demand, or lower prevalence would increase a country's wages more than acquiring HP in another industry with lower complexity, demand, or higher prevalence. The document also relates this framework to arguments that countries producing "rich country goods" tend to be richer, as these goods provide more learning and technological upgrading opportunities.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    Trade, Foreign Investment, and Industrial Policy for Developing Countries 4057

    model, however, a country will have positive production in all industries because it
    will always have a few goods within any industry where its productivity draws are very
    high. Letting Y ¼ Swj L j denote worldwide income, then the trade balance conditions
    are Sim Djm vm Y ¼ w j L j (value of sales equal value of purchases for country j). These
    conditions determine the equilibrium wages w1, . . ., wN.
    How is the wage in a country affected by acquiring HP in an industry? If a country had a
    choice, in which industry would achieving collective action have the greatest impact on
    wages?23 These are key questions for IP. Note that we have assumed that there are no deep
    sources of comparative advantage, so this would not be an issue in this choice. Then it seems
    reasonable that countries would be able to increase wages more by focusing their efforts in
    industries that have higher complexity, are larger (or have higher demand), and have a
    lower prevalence: higher complexity means that there is more to gain from collective
    action, while larger demand combined with low prevalence implies higher rents. Under
    some conditions, one can in fact prove this result. In particular, assume that countries 1
    and 2 are identical except that they have HP in industries 1 and 2, respectively, with no
    HP in the rest of industries (i.e., country 1 has HP only in industry 1 and country 2 has
    HP only in industry 2 and ^xj1 ¼ ^xj2 for all j ¼ 3, . . ., N ). Then one can show that the
    wage in country 1 is higher than in country 2 if x1 > x2 or if v1 > v2. Also, assuming that
    x1 ¼ x2 and v1 ¼ v2, then w1 > w2 if s1 < s2 (see Appendix).24
    We have assumed thus far that there are no differences in industry-level productiv-
    ity across countries. If this were not the case, then it is clear that a country may want to
    go against its latent comparative advantage and specialize in goods with combinations
    of high complexity, high demand, and low prevalence. Thus, this model may be suit-
    able to think about IP, although it is important to note that trade protection is not an
    effective policy in this framework.

    2.3.2 Relation of the model to some recent contributions


    We now show how to place some recent arguments for IP in the context of this simple
    analytical framework. Hausmann, Hwang, and Rodrik (2006) argue that the varied eco-
    nomic performance of different countries is partly explained by the goods that they pro-
    duce. Other things equal (including physical and human capital stocks), countries that
    specialize in what they call “rich country goods” are richer. Their explanation is that such
    goods provide more opportunities for learning by doing (similar to Young, 1991) and for
    technological and institutional upgrading that ultimately benefits the whole economy.
    The model presented here can capture this notion in a slightly different way. In this
    model we may talk about “rich country industries” as ones that are more complex have
    higher worldwide demand or exhibit lower prevalence. Countries that achieve HP in
    these industries would be able to sustain higher income levels, and getting there would
    entail higher growth rates.

    You might also like