Redding, Stephen and Schott, Peter K. (2003) Distance, skill deepening and development: will peripheral countries ever get rich? . London School of Economics and Political Science. Centre for Economic Performance, London, UK.
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Abstract
This paper models the relationship between countries’ distance from global economic activity, endogenous investments in education, and economic development. Firms in remote locations pay greater trade costs on both exports and intermediate imports, reducing the amount of value added left to remunerate domestic factors of production. If skill- intensive sectors have higher trade costs, more pervasive input-output linkages, or stronger increasing returns to scale, we show theoretically that remoteness depresses the skill premium and therefore incentives for human capital accumulation. Empirically, we exploit structural relationships from the model to demonstrate that countries with lower market access have lower levels of educational attainment. We also show that the world’s most peripheral countries are becoming increasingly economically remote over time.
| Item Type: | Monograph (Discussion Paper) |
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| Official URL: | http://cep.lse.ac.uk/ |
| Additional Information: | © 2003 Stephen Redding and Peter. K. Schott |
| Divisions: | Centre for Economic Performance Economics |
| Subjects: | H Social Sciences > HB Economic Theory |
| JEL classification: | F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O10 - General F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies |
| Date Deposited: | 05 Mar 2008 10:10 |
| Last Modified: | 03 Nov 2024 19:30 |
| URI: | http://eprints.lse.ac.uk/id/eprint/3703 |
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