Globalization and the rise of the entrepreneurial economy

Arbeitspapier

This paper argues that globalization has led to a shift in developed countries from an industrial to an entrepreneurial model of production. Globalization is interpreted as a level shock in the supply of unskilled labor to the world economy, a decrease in the level of political risk associated with outward foreign direct investment (offshoring), and the widespread diffusion of a general purpose technology such as ICT. The im-pact of these exogenous shocks is then analyzed in a variety expansion model that distinguishes among three types of varieties. Following the life cycle we distinguish among new, mature and offshore production. The above shocks all result in a shift in comparative advantage in developed countries towards new varieties which corres-pond to the early stage of the product life cycle. Moreover, because entrepreneurs serve as agents that move varieties between life cycle stages, their importance in-creases due to globalization. The many new opportunities for profit benefit entrepre-neurs and skilled labor. By contrast, factors of production employed in the mature stages of the life cycle become less important. Thus, the model explains the emer-gence of what we label an entrepreneurial economy.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Jena Economic Research Papers ; No. 2007,003

Classification and Topics

• Classification: Wirtschaft ; Global Outlook ; Wage Level and Structure; Wage Differentials
• Subject: Globalisierung ; Innovationswettbewerb ; Produktlebenszyklus ; Komparativer Kostenvorteil ; Unternehmer ; Industriestaaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Audretsch, David B. ; Sanders, Mark
• Event: Veröffentlichung
• (who): Friedrich Schiller University Jena and Max Planck Institute of Economics
• (where): Jena
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/25578
• Last update: 10.03.2025, 11:44 AM CET