A Microprocessor Revolution and the World Distribution of Income

Abstract

This article shows that even if the world economy is able to withstand and surmount the present world crisis, the combination of market forces and rapid technical change that would be the result of a microprocessor revolution will give rise to large shift in the distribution of income within and between both rich and poor countries. Some developed and developing economies may be unable to join the move to new technologies. In a world governed by only economic forces, all countries, whether they choose to adopt new systems of production or not, will be affected. Indeed, whatever their degree of involvement, all countries are beginning to feel in varying degrees the chain reaction that reverberates through and between all sectors of their domestic and the world economies. To gain insights into interrelations between technological change and global markets, this article uses a special type of model-a general equilibrium model-that enables us to focus on exactly these variables.