The Evolution of Comparative Advantage: Measurement and Welfare Implications / Andrei A. Levchenko, Jing Zhang.

Format:

Book

Author/Creator:

Levchenko, Andrei A.

Contributor:

National Bureau of Economic Research.

Zhang, Jing.

Series:

Working Paper Series (National Bureau of Economic Research) no. w16806.

NBER working paper series no. w16806

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Evolution of Comparative Advantage

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2011.

Summary:

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.

Notes:

Print version record

February 2011.