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Specialization, Factor Accumulation and Development

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  • Doireann Fitzgerald
  • Juan Carlos Hallak

Abstract

We estimate the effect of factor proportions on the pattern of manufacturing specialization in a cross-section of OECD countries, taking into account that factor accumulation responds to productivity. We show that the failure to control for productivity differences produces biased estimates. Our model explains 2/3 of the observed differences in the pattern of specialization between the poorest and richest OECD countries. However, because factor proportions and the pattern of specialization co-move in the development process, their strong empirical relationship is not sufficient to determine whether specialization is driven by factor proportions, or by other mechanisms also correlated with level of development.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10638.

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Date of creation: Jul 2004
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Publication status: published as Fitzgerald, Doireann and Juan Carlos Hallak. "Specialization, Factor Accumulation And Development," Journal of International Economics, 2004, v64(2,Dec), 277-302.
Handle: RePEc:nbr:nberwo:10638

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  1. Donald R. Davis & David E. Weinstein, 1996. "Does Economic Geography Matter for International Specialization?," NBER Working Papers 5706, National Bureau of Economic Research, Inc.
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  17. Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
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