Large Country Effect, Division of Labor Deepening and Income Gaps across Countries
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| Title | Large Country Effect, Division of Labor Deepening and Income Gaps across Countries
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| Author | Li Junhua and Ouyang Yao |
| Organization | Hunan University of Commerce, Hunan Changsha, 410205,China; Business School, Hunan Normal University, Chang Sha, Hu Nan Province, 410081, China |
| Email | lijhemail@126.com；ouyangyao008@163.com |
| Key Words | Large Country Effect; Income Gaps across Countries; Population Size |
| Abstract | Population size and land area are the two most important natural features of large countries. The existence of the large country effect and the condition of its existing can be inferred from the two natural features. It is showed in this paper that large country effect may indeed exist, but appear only under some conditions. The gap of real per capita incomes between large country and small country have a positive relationship with land area, but have a inverted U-shaped connection with population size. Under land area and other conditions given, if the population size of a country is relatively but not too big, the real per capita incomes in this country will be higher than that in the small country. However, if population size is too large, the large countries will lose its advantage due to the over crowded population. It is showed through continuously studying that the advantage of large country can not maintain if the internal transaction cost of the large country is higher or its technical level is relatively backward than that of small country. On the other hand, with the increased openness between countries, large country and small country can all get benefit from the open policy, but the interests of small countries derive more, resulting in narrowing the gap between the two countries, which means that the large country effect may be weakened with the increase of economic openness. |
| Serial Number | WP832 |
| Time | 2015-03-10 |
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