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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title The evolution of comparative advantage: measurement and implications
Organization Unit
  • Andrei A Levchenko
  • Jingjing Zhang
  • English
Institution University of Zurich : UBS International Center of Economics in Society
Series Name UBS Center Working Paper Series
Number 11
ISSN 2296-2778
Number of Pages 63
Date 2015
Abstract Text 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 signicant 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-specic 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.
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Keywords Technological change, sectoral TFP, Ricardian models of trade,, , welfare