تخصص ها، محدودیت های مالی و توزیع درآمد Specializations, financial constraints, and income distribution

1 Introduction The progress of globalization causes drastic changes in the industrial structures of many countries. The production process has been internationally specialized in different stages across countries, and global value chains have organized international production worldwide. Firms often outsource the production stages to different countries. In such a situation, the terms of trade, which affect the allotment of final goods as income, are subject to the production environments in the outsourced countries. In this paper, we investigate how the interaction of international trade and financial development (which is one of the key determinants of the production environments) impacts across- and withincountry income distributions by applying a multi-country dynamic general equilibrium model. There are many earlier works on trade and across- and within-country income distributions. Matsuyama (1996, 2004, 2013) demonstrated that when there are financial market imperfections or increasing returns to scale, international trade always divides ex ante symmetric countries into the rich and the poor. Manasse and Turrini (2001), Yeaple (2005), Sampson (2014), Blanchard and Willmann (2016), Helpman et al. (2016), and Furusawa and Konishi (2016) investigated the effects of international trade on withincountry income inequality. In contrast to these studies, our focus is on the effect of financial constraints on across- and within-country income distributions that result from international trade.1 In our model, there are three countries. The first and second countries specialize in producing (country-specific) intermediate goods that are exported to the third country. Both intermediate goods are produced from capital with a linear technology. The third country produces the final goods by using its own labor force and the intermediate goods purchased from the first and second countries. The first and second countries import the final goods from the third country by selling all their products to the third country. The production function for the final goods in the third country is of the CES (Constant Elasticity of Substitution) type. The elasticity of substitution between the two intermediate goods is the key factor in determining the allotment of the final goods. In each period, agents in the first and second countries (who are potential entrepreneurs) receive idiosyncratic productivity shocks. Agents who draw lower productivity shocks become lenders, and agents who draw higher productivity shocks become capital producers (borrowers): Lenders and borrowers are endogenously determined in equilibrium. The financial markets in the three countries are segmented from each other and each market clears within each country. Agents in the first and second countries face financial constraints. Because of the financial constraints, agents in the first and second countries can borrow only up to a certain proportion of their own funds, and this proportion can be regarded as the degree of financial development, as in Aghion and Banerjee (2005) and Aghion et al. (2005). If the financial constraints are relaxed in a country, more production resources are intensively used by higher-productivity capital producers, and the aggregate productivity in that country rises. In this model setting, we investigate how the final goods are distributed across the three countries.