Quality, Trade and the Moving Window: The Globalization Process

30 Pages Posted: 27 Nov 2007

See all articles by John Sutton

John Sutton

London School of Economics & Political Science (LSE) - Department of Economics

Abstract

The globalization process is analyzed in a model where firms differ in productivity and quality. A lower bound to quality emerges, below which firms cannot sell, however low their (local) wage rate. The range of quality levels between the maximum and this lower bound shifts upwards when trade is liberalized (the moving window). The initial phase of globalization, associated with trade liberalization, in an initially segmented (but not autarkic) world, may reduce welfare in countries with intermediate levels of capability, but these countries may be the most important gainers as capabilities are transferred in subsequent phases.

Suggested Citation

Sutton, John, Quality, Trade and the Moving Window: The Globalization Process. The Economic Journal, Vol. 117, No. 524, pp. F469-F498, November 2007. Available at SSRN: https://ssrn.com/abstract=1032374 or http://dx.doi.org/10.1111/j.1468-0297.2007.02119.x

John Sutton (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

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