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Financial Markets, Industrial Specialization and Comparative Advantage - Evidence from OECD Countries

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Author Info
Svaleryd, Helena (Dept. of Economics, Stockholm University)
Vlachos, Jonas () (Department of Economics, Stockholm School of Economics)

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Abstract

Due to underlying technological and organizational differences, industries differ

in their need for external finance. Since services provided by the financial sector

are largely immobile across countries, the pattern of industrial specialization

should be influenced by the degree of financial development. We find this effect

to be strong. In fact, the financial sector has greater impact on industrial

specialization among OECD countries than differences in human and physical

capital. We also show that the causality indeed run from the financial sector to

specialization. Further, financial sectors are a source of comparative advantage

in a way consistent with the Hecksher-Ohlin-Vanek model. Results on which

aspects of financial systems that are of importance for specialization and

comparative advantage are also presented.

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Publisher Info
Paper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2002:6.

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Length: 43 pages
Date of creation: 13 Jun 2002
Date of revision:
Handle: RePEc:hhs:sunrpe:2002_0006

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Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
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Related research
Keywords: Financial intermediation; Financial systems; Specialization patterns; Financial intermediation; Financial systems; Specialization patterns; Comparative advantage;

Find related papers by JEL classification:
F14 - International Economics - - Trade - - - Country and Industry Studies of Trade
G20 - Financial Economics - - Financial Institutions and Services - - - General
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Borja Larrain, 2005. "The stock market and cross country differences in relative prices," Working Papers 05-6, Federal Reserve Bank of Boston. [Downloadable!]
  2. Miklós Koren, 2003. "Financial Globalization, Portfolio Diversification, and the Pattern of International Trade," IMF Working Papers 03/233, International Monetary Fund. [Downloadable!]
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