A NEW THEORY OF INDUSTRIALIZATION

This paper constructs an equilibrium model with consumer-producers, ec onomies of specialization, and transaction costs. The comparative stat ics of equilibrium can be used to predict several concurrent phenomena associated with an industrialization process: an increase in producti vity, an increase in trade dependence, increases in the division of la bor and specialization, the emergence of new producer goods at a layer of the hierarchy of goods, and an increase in the number of layers of the hierarchy, increases in the diversity of the economic structure a nd in the degree of integration of the economy, and an increase in cap ital goods. (C) 1995 Academic Press, Inc.