Quality and Trade
AbstractWe present a model of trade in which similar countries trade more with each other than very different countries. The reason is that high human capital countries have a comparative advantage at producing high quality goods, but are also rich enough to want to consume high quality. As a result, countries choose trading partners at a similar level of development, who produce similar quality products. The model helps account for the observed trade patterns, and sheds light on international income comparisons. It also helps explain recent concerns of Eastern European countries that they have "nothing to sell" to the West.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3622.
Date of creation: Feb 1991
Date of revision:
Publication status: published as Journal of Developmental Economics, June 1997, Vol. 53(1): 1-15.
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Other versions of this item:
- Kevin M.Shleifer Murphy & Andrei, 1991. "Quality and Trade," University of Chicago - George G. Stigler Center for Study of Economy and State 66, Chicago - Center for Study of Economy and State.
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