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The Rise of Middle Kingdoms: Emerging Economies in Global Trade

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  • Gordon H. Hanson

Abstract

In this paper, I examine changes in international trade associated with the integration of low- and middle-income countries into the global economy. Led by China and India, the share of developing economies in global exports more than doubled between 1994 and 2008. One feature of new trade patterns is greater South-South trade. China and India have booming demand for imported raw materials, which they use to build cities and factories. Industrialization throughout the South has deepened global production networks, contributing to greater trade in intermediate inputs. A second feature of new trade patterns is the return of comparative advantage as a driver of global commerce. Growth in low- and middle-income nations makes specialization according to comparative advantage more important for the global composition of trade, as North-South and South-South commerce overtakes North-North flows. China’s export specialization evolves rapidly over time, revealing a capacity to speed up product ladders. Most developing countries hyper-specialize in handful of export products. The emergence of low- and middle-income countries in trade reveals significant gaps in knowledge about the deep empirical determinants of export specialization, the dynamics of specialization patterns, and why South-South and North-North trade differ.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17961.

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Date of creation: Mar 2012
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Handle: RePEc:nbr:nberwo:17961

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References

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  1. Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
  2. Olivier CADOT & Céline CARRERE & Vanessa STRAUSS-KHAN, 2007. "Export Diversification:What’s behind the Hump?," Working Papers 200724, CERDI.
  3. Andrew K. Rose, 2002. "Do We Really KNow that the WTO Increases Trade?," Working Papers 182002, Hong Kong Institute for Monetary Research.
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  5. Andrew K. Rose, 2002. "Do WTO Members have More Liberal Trade Policy?," NBER Working Papers 9347, National Bureau of Economic Research, Inc.
  6. Ann Harrison & Margaret McMillan, 2009. "Offshoring Jobs? Multinationals and US Manufacturing Employment," Discussion Papers Series, Department of Economics, Tufts University 0741, Department of Economics, Tufts University.
  7. Davin Chor, 2008. "Unpacking Sources of Comparative Advantage: A Quantitative Approach," Working Papers 13-2008, Singapore Management University, School of Economics.
  8. Gene M. Grossman & Esteban Rossi-Hansberg, 2006. "Trading Tasks: A Simple Theory of Offshoring," NBER Working Papers 12721, National Bureau of Economic Research, Inc.
  9. Kei-Mu Yi, 2000. "Can vertical specialization explain the growth of world trade?," Staff Reports 96, Federal Reserve Bank of New York.
  10. Peter K. Schott, 2006. "The Relative Sophistication of Chinese Exports," NBER Working Papers 12173, National Bureau of Economic Research, Inc.
  11. Peter K. Schott, 2004. "Across-product Versus Within-product Specialization in International Trade," The Quarterly Journal of Economics, MIT Press, vol. 119(2), pages 646-677, May.
  12. Robert C. Feenstra, 2010. "Offshoring in the Global Economy: Microeconomic Structure and Macroeconomic Implications," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262013835, January.
  13. Robert C. Feenstra & Gordon H. Hanson, 2005. "Ownership and Control in Outsourcing to China: Estimating the Property-Rights Theory of the Firm," The Quarterly Journal of Economics, MIT Press, vol. 120(2), pages 729-761, May.
  14. David Hummels, 2007. "Transportation Costs and International Trade in the Second Era of Globalization," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 131-154, Summer.
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Cited by:
  1. Kym Anderson, 2013. "Agricultural Price Distortions: Trends and Volatility, Past and Prospective," Departmental Working Papers 2013-01, The Australian National University, Arndt-Corden Department of Economics.
  2. Edelman, Peter B. & Holzer, Harry J., 2013. "Connecting the Disconnected: Improving Education and Employment Outcomes Among Disadvantaged Youth," IZA Policy Papers 56, Institute for the Study of Labor (IZA).
  3. Kwok Tong Soo, 2013. "Intra-industry trade," Working Papers 33867578, Lancaster University Management School, Economics Department.
  4. Christophe Charlier & Sarah Guillou, 2013. "Distortion Effects of Export Quota Policy: An Analysis of the China - Raw Materials Dispute," GREDEG Working Papers 2013-07, Groupe de REcherche en Droit, Économie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
  5. Sarah Guillou & Christophe Charlier, 2013. "Distortion Effects of Export Quota Policy: An Analysis of the China - Raw Materials Dispute," Sciences Po publications 2013-07, Sciences Po.
  6. Nakhoda, Aadil, 2013. "The impact of the exports of BRIC countries plus Turkey on the exports of Pakistan," MPRA Paper 52477, University Library of Munich, Germany.
  7. Alberto Behar, 2013. "The Endogenous Skill Bias of Technical Change and Inequality in Developing Countries," IMF Working Papers 13/50, International Monetary Fund.
  8. Myriam Alejandra Gómez Cárdenas, 2013. "Volatility in the Mexican offshoring industry," Post-Print dumas-00910194, HAL.
  9. Arvind Subramanian & Martin Kessler, 2013. "The Hyperglobalization of Trade and Its Future," Working Paper Series WP13-7, Peterson Institute for International Economics.
  10. Anne-Célia Disdier & Lionel Gérard Fontagné & Mondher Mimouni, 2013. "Tariff Liberalization and Trade Integration of Emerging Countries," CESifo Working Paper Series 4425, CESifo Group Munich.
  11. Consoli,Davide & Vona,Francesco & Rentocchini,Francesco, 2014. "That was then, this is now: Skills and Routinization in the 2000s," INGENIO (CSIC-UPV) Working Paper Series 201306, INGENIO (CSIC-UPV).
  12. Raúl Serrano & Vicente Pinilla, 2013. "New directions of trade for the agri-food industry: a disaggregated approach for different income countries, 1963-2000," Documentos de Trabajo dt2013-02, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
  13. Roberto Golinelli & Giuseppe Parigi, 2013. "Tracking world trade and GDP in real time," Temi di discussione (Economic working papers) 920, Bank of Italy, Economic Research and International Relations Area.
  14. Barbara Dluhosch & Michael Pflüger & Philipp Ehrl & Volker Treier, 2013. "Asien, Lateinamerika: Verschiebt der Aufstieg der neuen Wachstumsmärkte das Kräfteverhältnis auf dem Weltmarkt?," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 66(04), pages 03-14, 03.

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