The evolution of comparative advantage: Measurement and implications

Arbeitspapier

We estimate productivities at the sector level for 72 countries and 5 decades, and examine how they evolve over time in both developed and developing countries. In both country groups, comparative advantage has become weaker: productivity grew systematically faster in sectors that were initially at greater comparative disadvantage. These changes have had a significant impact on trade volumes and patterns, and a non-negligible welfare impact. In the counterfactual scenario in which each country's comparative advantage remained the same as in the 1960s, and technology in all sectors grew at the same country-specific average rate, trade volumes would be higher, cross-country export patterns more dissimilar, and intra-industry trade lower than in the data. In this counterfactual scenario, welfare is also 1.6% higher for the median country compared to the baseline. The welfare impact varies greatly across countries, ranging from ..1.1% to +4.3% among OECD countries, and from ..4.6% to +41.9% among non-OECD countries.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2014-12

Classification and Topics

• Classification: Wirtschaft ; Neoclassical Models of Trade ; Economic Growth of Open Economies ; Technological Change: Choices and Consequences; Diffusion Processes ; Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
• Subject: technological change ; sectoral TFP ; Ricardian models of trade ; welfare

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Levchenko, Andrei A. ; Zhang, Jing
• Event: Veröffentlichung
• (who): Federal Reserve Bank of Chicago
• (where): Chicago, IL
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/130691
• Last update: 10.03.2025, 11:45 AM CET