Working Paper: CEPR ID: DP1802
Authors: James Proudman; Stephen Redding
Abstract: The theoretical literature on endogenous growth and international trade suggests that comparative advantage is endogenous. Sector-specific learning by doing and technology transfer respectively provide reasons why initial patterns of international specialization may persist or exhibit mobility over time. This paper evaluates the extent of persistence or mobility in trade in manufactured goods in Germany and the United Kingdom for the period 1970?93. A measure of the extent of specialization is presented and its evolution over time modelled as a sequence of cross-section distributions. Evidence of considerable mobility is found, with the degree of mobility in the United Kingdom exceeding that in Germany.
Keywords: distribution dynamics; international trade; learning by doing; Markov chains; revealed comparative advantage; technological change
JEL Codes: C10; F10; O30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| sector-specific learning by doing (J24) | persistence in international specialization (F29) |
| technology transfer (O33) | mobility in international trade patterns (F20) |
| evolution of RCA distributions (D39) | mobility in trade patterns (O24) |
| UK trade patterns (F14) | mobility compared to Germany (J61) |
| industry moving out of RCA state (L59) | probability of moving out of RCA state (R20) |
| remaining in the same RCA state (R50) | likelihood of remaining in the same state (C41) |