Input Chains and Industrialization
UPF Economics and Business Working Paper No. 498
34 Pages Posted: 24 Nov 2000
Date Written: November 2000
A key aspect of industrialization is the adoption of increasing-returns-to-scale, industrial, technologies. Two other, well-documented aspects are that industrial technologies are adopted throughout intermediate-input chains and that they use intermediate inputs intensively relative to the technologies they replace. These features of industrial technologies combined imply that countries with access to similar technologies may have very different levels of industrialization and income, even if the degree of increasing returns to scale at the firm level is relatively small. Furthermore, a small improvement in the productivity of industrial technologies can trigger full-scale industrialization and a large increase in income.
Keywords: intermediate inputs, input chains, industrialization, aggregate-income differences
JEL Classification: O11, O14, O21
Suggested Citation: Suggested Citation