Trade, demand spillovers and industrialization :
The emerging global middle class in perspective.

Alain Desdoigts, Université Paris-Est and Paris School of Economics,
Centre d'Économie de la Sorbonne
Fernando Jaramillo*, Universidad del Rosario

Abstract. In this paper, we investigate international demand spillovers brought about by a global middle class and their impact on trade patterns and industrialization. We propose a multi-industry and two-country trade model featuring demand complementarities propagating increasing returns across industries and national boundaries. We show how the international extent of demand spillovers depends upon asymmetries in domestic income distribution, labor efficiency, and labor force size ; that is, on the global distribution of real income.
Keywords : Trade, spillovers, nonhomothetic preferences, world income distribution.

JEL Classification : F10, O11, O14.

*Universidad del Rosario, Calle 14 # 4-69, Bogotá - Colombia.