Increasing returns and the international distribution of income

Vol. 28 No. 3 (2008)

Jul-Sep / 2008
Published July 1, 2008
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Zagottis, Alexandre De. 2008. “Increasing Returns and the International Distribution of Income”. Brazilian Journal of Political Economy 28 (3):454-70.

Increasing returns and the international distribution of income

Alexandre De Zagottis
Bacharel em Engenharia de Produção pela Universidade de São Paulo, Master in Business Administration pelo Massachusetts Institute of Technology e Doutor em Economia de Empresas pela Fundação Getulio Vargas
Brazilian Journal of Political Economy, Vol. 28 No. 3 (2008), Jul-Sep / 2008, Pages 454-470


 The existence of increasing returns in high technology industries assigns a path dependent character to the international division of labor. Rich countries, first entrants in these industries, enjoy permanent advantages that prevent, in a free market environment, the development of such industries in middle-income countries. This dynamics allows the former group of countries to experience a higher growth rate of labor productivity than the latter, and, as a result, increases the gap between the workers’ standard of living in these countries. It is up to the States of middle-income countries the task of devising development strategies capable of breaking such pattern and improving the international distribution of income.

JEL Classification: D62; F15; F43; O25; O38; O47.

Keywords: increasing returns externalities international division of labor national strategy