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Complexity, Specialization and Growth

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  • Benno Ferrarini

    ()
    (Asian Development Bank)

  • Pasquale Scaramozzino

    ()
    (University of Rome "Tor Vergata" and SOAS)

Abstract

This paper analyzes the role of complexity in production on the level of output and on its rate of growth. We develop an endogenous growth model with human capital accumulation, where increased complexity could exert either a positive or a negative effect on the level of output but always a positive effect on its rate of growth. Our empirical measure of complexity is derived from net trade flows, and is based on the product space description of production sectors in the global economy. The evidence from a broad cross-section of countries is consistent with the main theoretical predictions of the model, and supports the view that production complexity is important in order to account for differences in economic performance. An indicator of the intensity of vertical trade among countries is also shown to be relevant to explain output performance

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Bibliographic Info

Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 275.

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Length: 29 pages
Date of creation: 30 Apr 2013
Date of revision: 30 Apr 2013
Handle: RePEc:rtv:ceisrp:275

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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Web page: http://www.ceistorvergata.it
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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Web: http://www.ceistorvergata.it

Related research

Keywords: International Trade Flows; Vertical Trade; Economic Growth; Complexity;

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  1. Costinot, Arnaud, 2007. "On the Origins of Comparative Advantage," University of California at San Diego, Economics Working Paper Series qt07g7g8h8, Department of Economics, UC San Diego.
  2. Ricardo Hausmann & C├ęsar Hidalgo, 2011. "The network structure of economic output," Journal of Economic Growth, Springer, vol. 16(4), pages 309-342, December.
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  4. W. W. Rostow, 1959. "The Stages Of Economic Growth," Economic History Review, Economic History Society, vol. 12(1), pages 1-16, 08.
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  6. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  7. Andrea Zaghini, 2005. "Evolution of trade patterns in the new EU member states," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 13(4), pages 629-658, October.
  8. Alessandrini, Michele & Fattouh, Bassam & Ferrarini, Benno & Scaramozzino, Pasquale, 2011. "Tariff liberalization and trade specialization: Lessons from India," Journal of Comparative Economics, Elsevier, vol. 39(4), pages 499-513.
  9. Lall, Sanjaya, 1992. "Technological capabilities and industrialization," World Development, Elsevier, vol. 20(2), pages 165-186, February.
  10. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
  11. Georg Duernecker & Moritz Meyer & Fernando Vega Redondo, 2012. "Being Close to Grow Faster: A Network-Based Empirical Analysis of Economic Globalization," Economics Working Papers ECO2012/05, European University Institute.
  12. Alberto Dalmazzo & Tuomas Pekkarinen & Pasquale Scaramozzino, 2007. "O-ring Wage Inequality," Economica, London School of Economics and Political Science, vol. 74(295), pages 515-536, 08.
  13. Hernando Zuleta, 2004. "A Note on Scale Effects," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(1), pages 237-242, January.
  14. Hausmann, Ricardo & Klinger, Bailey, 2006. "Structural Transformation and Patterns of Comparative Advantage in the Product Space," Working Paper Series rwp06-041, Harvard University, John F. Kennedy School of Government.
  15. Ferrarini, Benno, 2011. "Mapping Vertical Trade," ADB Economics Working Paper Series 263, Asian Development Bank.
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