The International Demonstration Effect and the Domestic Division of Labour: A Simple Model

14 Pages Posted: 7 Jan 2006

See all articles by Po-Ting Liu

Po-Ting Liu

Monash University - Department of Economics

Guang-Zhen Sun

Monash University - Department of Economics; Max Planck Institute for Research Into Economic Systems

Abstract

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.

Suggested Citation

Liu, Po-Ting and Sun, Guang-Zhen, The International Demonstration Effect and the Domestic Division of Labour: A Simple Model. Pacific Economic Review, Vol. 10, No. 4, pp. 515-528, December 2005, Available at SSRN: https://ssrn.com/abstract=871274 or http://dx.doi.org/10.1111/j.1468-0106.2005.00289.x

Po-Ting Liu (Contact Author)

Monash University - Department of Economics ( email )

Wellington Road
Clayton, Victoria 3
Australia

Guang-Zhen Sun

Monash University - Department of Economics ( email )

Wellington Road
Clayton, Victoria 3
Australia
61-3-99052409 (Phone)
61-3-99055476 (Fax)

Max Planck Institute for Research Into Economic Systems

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
14
Abstract Views
1,469
PlumX Metrics