Trade, demand spillovers, and industrialization: The emerging global middle class in perspective

Alain Desdoigts (1, 2, 3) , Fernando Jaramillo (4)

1 Université Paris-Est
2 CES - Centre d'économie de la Sorbonne
3 PSE - Paris School of Economics
4 UNIANDES - Universidad de los Andes [Bogota]

In this paper, we investigate international demand spillovers brought about by a global middle class and their impact on trade patterns and industrialization. We propose a multi-industry and two-country trade model featuring demand complementarities propagating increasing returns across industries and national boundaries. We show how the international extent of demand spillovers depends upon asymmetries in domestic income distribution, labor efficiency, and labor force size; that is, on the global distribution of real income.

Mots clés: Trade; Spillovers; Nonhomothetic preferences; World income distribution

Domaines: Economies et finances

Alain Desdoigts, Fernando Jaramillo. Trade, demand spillovers, and industrialization: The emerging global middle class in perspective. Journal of International Economics, 2009, 79 (2), pp.248-258. ⟨10.1016/j.jinteco.2009.07.008⟩. ⟨halshs-00429016⟩