Global financial crisis and international division of Labour

Gennadi Kazakevitch, Ratbek Dzhumashev

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While the most optimistic economists and media commentators are rushing to declare that the worst of the world economic crisis is over, those declarations not only may be premature but also overshadow the fundamental reasons and possible lasting consequences of the current global downturn. In contrast to the prevailing line of arguments of the current orthodoxy on the reasons for the crises, this paper provides an explanation for the current crisis in simple real, rather than financial market, terms. First, we show theoretically the relationship between financial bubbles with both consumption and de-industrialization. Then, by estimating models, based on cross-country panel data, we derive a worldwide trend linking industrialisation to an improving balance of payments and foreign debt position, while, de-industrialisation is found to be correlated with balance of payments deficit and foreign debt. This might be an indication that post-industrial economic development, as it has been evolving so far, is "no-through road", for Western nations, reducing opportunities for employment and ultimately leading to decreases in standard of living. JEL Classification: E32; O57

Original languageEnglish
Title of host publication2010 International Conference on Management Science and Engineering, ICMSE 2010
PublisherIEEE, Institute of Electrical and Electronics Engineers
Number of pages9
ISBN (Print)9781424481163
Publication statusPublished - 2010
EventInternational Conference on Management Science and Engineering 2010 - Melbourne, Australia
Duration: 24 Nov 201026 Nov 2010
Conference number: 17th


ConferenceInternational Conference on Management Science and Engineering 2010
Abbreviated titleICMSE 2010


  • Industrialising economies
  • Panel data analysis
  • Post-industrial economies
  • World economic crisis

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