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Gilles, Robert P.
Lazarova, Emiliya
Ruys, Pieter H.M.
Year of Publication: 
Series/Report no.: 
Tinbergen Institute Discussion Paper 06-035/2
Xiaokai Yang's theory of economic specialization under increasing returns to scale is a formal development of the fundamental Smith-Young theorem on the extent of the market and the social division of labor. In this theory specialization and, thus, the social division of labor is firmly embedded within a system of perfectly competitive markets. This leaves unresolved whether and how such development processes are possible in economies based on more primitive, non-market organizations. In this paper we discuss a general relational model of economic interaction. Within this non-market environment we discuss the emergence of economic specialization and eventually of economic trade and a social division of labor. We base our approach on three levels in organizational development: the presence of a stable relational structure; the presence of relational trust and subjective specialization; and, finally, the emergence of objective specialization through the institution and the social recognition of economic roles.
Economic development
social division of labor
non-market economies.
Document Type: 
Working Paper

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