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Financial Markets, the Pattern of Specialization and Comparative Advantage. Evidence from OECD countries

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  • Vlachos, Jonas

    ()
    (Dept. of Economics, Stockholm School of Economics)

  • Svaleryd, Helena

    (Department of Economics)

Abstract

Due to underlying technological differences, industries differ in their need for external finance. Since the services provided by the financial sector are largely immobile across countries, the pattern of specialization should be influenced by the degree of financial development. We find that this effect is strong: The financial sector has an even greater impact on the pattern of specialization among OECD countries than do differences in human- and physical capital. Further, it gives rise to comparative advantage in a way consistent with the Hecksher-Ohlin-Vanek model. Results on which aspects of financial systems that matter for specialization are also presented.

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Bibliographic Info

Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 449.

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Length: 39 pages
Date of creation: 30 May 2001
Date of revision: 03 Sep 2001
Handle: RePEc:hhs:hastef:0449

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Keywords: Financial intermediation; Financial systems; Specialization patterns; Comparative advantage;

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References

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Citations

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Cited by:
  1. Raymond Fisman & Inessa Love, 2007. "Financial Dependence and Growth Revisited," Journal of the European Economic Association, MIT Press, MIT Press, vol. 5(2-3), pages 470-479, 04-05.
  2. Marianna Belloc & Samuel Bowles, 2009. "International Trade, Factor Mobility and the Persistence of Cultural-Institutional Diversity," UMASS Amherst Economics Working Papers, University of Massachusetts Amherst, Department of Economics 2009-08, University of Massachusetts Amherst, Department of Economics.
  3. Cláudio Ribeiro de Lucinda, 2003. "International Trade in Manufactures and Finance," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31th Brazilian Economics Meeting], ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Gr c39, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  4. Guiso, Luigi & Jappelli, Tullio & Padula, Mario & Pagano, Marco, 2004. "Financial Market Integration and Economic Growth in the EU," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4395, C.E.P.R. Discussion Papers.
  5. Nathan Nunn, 2007. "Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 122(2), pages 569-600, 05.
  6. Ferguson, Shon & Formai, Sara, 2012. "Institution-Driven Comparative Advantage and Organizational Choice," Working Paper Series, Research Institute of Industrial Economics 925, Research Institute of Industrial Economics.
  7. Forssbæck , Jens & Oxelheim, Lars, 2008. "Financial Determinants of Foreign Direct Investment," Working Paper Series, Research Institute of Industrial Economics 741, Research Institute of Industrial Economics.
  8. Johannes Moenius & Daniel Berkowitz, 2004. "Institutional Change and Product Composition: Does the Initial Quality of Institutions Matter?," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 2004-662, William Davidson Institute at the University of Michigan.
  9. Braun, Matias, 2004. "Trade Liberalization and the Politics of Financial Development," Santa Cruz Department of Economics, Working Paper Series qt70v7f9ff, Department of Economics, UC Santa Cruz.
  10. Marianna Belloc & Samuel Bowles, 2009. "International Trade, Factor Mobility and the Persistence of Cultural-Institutional Diversity," Working Papers, University of Rome La Sapienza, Department of Public Economics 126, University of Rome La Sapienza, Department of Public Economics.
  11. Hattendorff, Christian, 2012. "Do natural resource sectors rely less on external finance than manufacturing sectors?," Discussion Papers 2012/17, Free University Berlin, School of Business & Economics.
  12. Michalski, Tomasz & Ors, Evren, 2012. "(Interstate) Banking and (interstate) trade: Does real integration follow financial integration?," Journal of Financial Economics, Elsevier, Elsevier, vol. 104(1), pages 89-117.

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