Working Paper: NBER ID: w14645
Authors: Arnaud Costinot
Abstract: Comparative advantage, whether driven by technology or factor endowment, is at the core of neoclassical trade theory. Using tools from the mathematics of complementarity, this paper offers a simple, yet unifying perspective on the fundamental forces that shape comparative advantage. The main results characterize sufficient conditions on factor productivity and factor supply to predict patterns of international specialization in a multi-factor generalization of the Ricardian model to which we refer as an "elementary neoclassical economy." These conditions, which hold for an arbitrarily large number of countries, goods, and factors, generalize and extend many results from the previous trade literature. They also offer new insights about the joint effects of technology and factor endowments on international specialization.
Keywords: No keywords provided
JEL Codes: F10; F11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| factor productivity (q) and factor supply (f) (E23) | aggregate output (q) (E23) |
| high productivity (O49) | specialization in high sectors (L89) |
| high factor endowment (F16) | production in sectors that intensively use abundant factors (E23) |
| logsupermodularity of f and h (C69) | aggregate output (q) logsupermodular (E23) |
| technological differences (O33) | factor productivity (q) (E23) |