Trade policy and specialization

Arbeitspapier

Trade liberalization leads to significant changes in countries' economic structures. The implied variation in the level and nature of specialization has important consequences for liberalizing economies. It is therefore extremely relevant for those countries pursuing trade liberalization initiatives to know how their specialization profiles would look like under lower trade costs. This paper examines the impact of trade policy on production specialization patterns in ten Latin American countries (Argentina, Brazil, Bolivia, Chile, Colombia, Ecuador, Mexico, Peru, Uruguay and Venezuela) over the period 1990-2001, and explicitly assesses the potential implications of a trade agreement with the United States. A theory-consistent measure of specialization is derived from the standard international trade theory: the share of the industry in a country's GDP. The role of trade policy in shaping the distribution of these shares is investigated using a simultaneous equation approach on sectoral value added and tariff and factor endowment data. Estimates are then used to predict countries' specialization patterns under a trade arrangement with the United States.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IDB Working Paper Series ; No. IDB-WP-134

Classification and Topics

• Classification: Wirtschaft ; Neoclassical Models of Trade ; Economic Integration ; Semiparametric and Nonparametric Methods: General ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
• Subject: Specialization ; Trade Policy ; Latin America

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Estevadeordal, Antoni ; Volpe Martincus, Christian
• Event: Veröffentlichung
• (who): Inter-American Development Bank (IDB)
• (where): Washington, DC
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/115372
• Last update: 10.03.2025, 11:44 AM CET