Document Type

Article

Publication Date

2015

DOI

10.3868/s060-004-015-0031-2

Publication Title

Frontiers of Economics in China

Volume

10

Issue

4

Pages

664-690

Abstract

While financial or trade integration between countries may increase the size of the market and aid the adoption of more advanced technologies, will it also increase the level of urban unemployment for a developing country? In this model, there is unemployment in the urban sector. Manufacturing firms engage in oligopolistic competition and choose increasing returns technologies to maximize profits. Financial firms provide capital to manufacturing firms and they also engage in oligopolistic competition. We show that an increase in the wage rate in the manufacturing sector changes neither the level of technology nor the level of employment in the manufacturing sector. While financial or trade integration between developing countries leads manufacturing firms to adopt more advanced technologies, the level and rate of employment in the manufacturing sector will not deteriorate.

Rights

© 2014 Higher Education Press & Brill. All rights reserved.

Included with the kind written permission of the publishers.

Original Publication Citation

Zhou, H. (2015). Unemployment and economic integration for developing countries. Frontiers of Economics in China, 10(4), 664-690. https://doi.org/10.3868/s060-004-015-0031-2

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