TY  - JOUR
AU  - Redding,Stephen
AU  - Schott,Peter K.
TI  - Distance, Skill Deepening and Development: Will Peripheral Countries Ever Get Rich?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9447
PY  - 2003
Y2  - January 2003
UR  - http://www.nber.org/papers/w9447
L1  - http://www.nber.org/papers/w9447.pdf
N1  - Author contact info:
Stephen J. Redding
Department of Economics
and Woodrow Wilson School
Princeton University
Fisher Hall
Princeton, NJ 08544
Tel: 609/258-4016
Fax: 609/258-6419
E-Mail: reddings@princeton.edu

Peter K. Schott
Yale School of Management
135 Prospect Street
New Haven, CT 06520-8200
Tel: 203/436-4260
Fax: 203/432-6974
E-Mail: peter.schott@yale.edu
AB  - This paper models the relationship between countries' distance from global economic activity, endogenous investments in education, and economic development. Firms in remote locations pay greater trade costs on both exports and intermediate imports, reducing the amount of value added left to remunerate domestic factors of production. If skill-intensive sectors have higher trade costs, more pervasive input-output linkages, or stronger increasing returns to scale, we show theoretically that remoteness depresses the skill premium and therefore incentives for human capital accumulation. Empirically, we exploit structural relationships from the model to demonstrate that countries with lower market access have lower levels of educational attainment. We also show that the world's most peripheral countries are becoming increasingly remote over time.
ER  -