The division of labour is limited by the type of market: The case of the Taiwanese machine tool industry

Abstract This paper seeks to illustrate that the division of labour is limited not only by the size of the market, i.e. aggregate purchasing power, but also by the type of market, i.e. the average income of individual consuming units. Consequently, for technology to advance in the production of certain goods, capital accumulation must occur. The multiplication of markets alone is insufficient. Empirical support for this proposition is provided by an examination of the Taiwanese machine tool industry. Central to the discussion is the treatment of the product as an economic variable.