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http://hdl.handle.net/10225/71
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| Title: | TRADE LIBERALIZATION AND DIVISION OF LABOR: IMPLICATIONS FOR POVERTY IN CHINA |
| Authors: | Peng, Xuehua |
| Keywords: | Trade Liberalization
Poverty in China
Incomplete Market Integration
Inframarginal Analysis
Division of Labor |
| Date Created: | 2006 |
| Publisher: | University of Kentucky |
| Abstract: | The concomitance of prosperity and poverty come as an enigma in today’s world.
As some people in this world benefit greatly from advanced technologies and
globalization, others are still suffering heavily from poverty. One noticeable fact is that
almost all developing countries have their own distinguished “poor area”. Such poor
areas seem to persist regardless of robust economic growth enjoyed by the overall
economy.
By decomposing the developing country into two regions, one rich coastal region
and one poor inland region, this research establishes a new classical general equilibrium
3X2 Ricardian model to investigate how trade liberalization will affect the participation
in the division of labor by poor individuals in the inland region in a developing country
and their associated welfare change under different trading conditions.
Our model of division of labor on poverty delineates the interdependent
relationship between individuals in the poor inland region, the rich coastal region and the
developed country. Market integration plays a very important role in such
interdependency. Low transaction efficiency is the bottle-neck constraint on the poor
inland region’s integration into international division of labor through international trade.
Thus, it is critical for the poor inland region to improve the market transaction efficiency
in order to enjoy gains from trade.
Our marginal and inframarginal analysis show that as an important part of trade
liberalization policy, tariff reduction may not always be a good policy choice for the
developing country to alleviate the poverty. Whether tariff reduction makes the inland
region better off depends on the initial general equilibrium market structure and the
developing country’s power of influencing its terms of trade. If the developing country is
large enough to determine the terms of trade in international trade with the developed
country, the developing country may increase the welfare level of the poor inland region
by increasing its tariff rate. But the developed country will oppose it because the tariff
rate increase in the developing country will hurt its welfare. Trade negotiation is then
necessary to determine the final tariff rate and the share of gains of trade to each country
and region. |
| URI: | http://hdl.handle.net/10225/71 |
| Appears in Collections: | Electronic Theses and Dissertations
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Files in This Item:
| File |
Description |
Size | Format |
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| Dissertation.pdf | | 1262Kb | Adobe PDF | View/Open |
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