Globalization, the structure of the world economy and economic development

How does the structure of the world economy determine the gains from participation therein? In order to answer this question, we conduct a state of the art network analysis of international trade to map the structure of the international division of labor (IDL). We regress cross-national variation in economic growth on positional variation and mobility of countries within the IDL from 1965 to 2000. We find that the highest rates of economic growth occurred to countries in the middle of the IDL over the course of globalization. Second, we find that upper tier positions in the IDL are converging with each other, but diverging from the lower tier. This suggests that the mechanism underlying the rapid economic growth in intermediate positions was their uniquely high rates of upward mobility, in turn a function of their middling position. Taken together, these findings suggest that a country’s long-term economic development is conditioned by its position in the IDL.