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Endowments, Specialization, and Policy


  • Olivier Cadot
  • Yuliya Shakurova


The paper explores the relationship between industry shares in production and their determinants including factor endowments, technology, and government policies, in a GDP-function framework. We use a new international panel dataset on production and trade compiled by the World Bank. As an intermediate step we calculate Hicks-neutral productivity indices that vary across industries, time, and countries. We find that own-TFP is robustly associated with industry shares across time and countries and that, after correcting for these productivity differences, output shares are related to factor endowments (Rybczynski effects) in a plausible way. Once Rybczynski effects are controlled for, we find little evidence of demand-side policies (import tariffs) affecting the allocation of resources; we find, however, more role for supply-side policies as the relative size of capital-intensive industries is positively associated with infrastructure-capital endowments. Copyright © 2010 Blackwell Publishing Ltd.

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  • Olivier Cadot & Yuliya Shakurova, 2010. "Endowments, Specialization, and Policy," Review of International Economics, Wiley Blackwell, vol. 18(5), pages 913-923, November.
  • Handle: RePEc:bla:reviec:v:18:y:2010:i:5:p:913-923

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    References listed on IDEAS

    1. Grossman, Gene M & Helpman, Elhanan, 1994. "Protection for Sale," American Economic Review, American Economic Association, vol. 84(4), pages 833-850, September.
    2. Marianna Belloc, 2009. "International Specialization and Labor Unions: Evidence from OECD Countries," Review of International Economics, Wiley Blackwell, vol. 17(1), pages 34-50, February.
    3. Georg Schaur & Chong Xiang & Anya Savikhin, 2008. "Factor Uses and the Pattern of Specialization," Review of International Economics, Wiley Blackwell, vol. 16(2), pages 368-382, May.
    4. Donald R. Davis & David E. Weinstein, 2001. "An Account of Global Factor Trade," American Economic Review, American Economic Association, vol. 91(5), pages 1423-1453, December.
    5. Harrigan, James, 1997. "Technology, Factor Supplies, and International Specialization: Estimating the Neoclassical Model," American Economic Review, American Economic Association, vol. 87(4), pages 475-494, September.
    6. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "Multilateral Comparisons of Output, Input, and Productivity Using Superlative Index Numbers," Economic Journal, Royal Economic Society, vol. 92(365), pages 73-86, March.
    7. Peter K. Schott, 2004. "Across-Product Versus Within-Product Specialization in International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 119(2), pages 647-678.
    8. Giovanni Maggi & Pinelopi Koujianou Goldberg, 1999. "Protection for Sale: An Empirical Investigation," American Economic Review, American Economic Association, vol. 89(5), pages 1135-1155, December.
    9. Ulrich R. Kohli, 1978. "A Gross National Product Function and the Derived Demand for Imports and Supply of Exports," Canadian Journal of Economics, Canadian Economics Association, vol. 11(2), pages 167-182, May.
    10. Trefler, Daniel, 1995. "The Case of the Missing Trade and Other Mysteries," American Economic Review, American Economic Association, vol. 85(5), pages 1029-1046, December.
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    Cited by:

    1. Bournakis, Ioannis & Vecchi, Michela & Venturini, Francesco, 2015. "Off-shoring, specialization and R&D," MPRA Paper 68382, University Library of Munich, Germany.
    2. Ioannis Bournakis & Michela Vecchi & Francesco Venturini, 2011. "Offshoring and Specialisation: Are Industries Moving Abroad?," Quaderni del Dipartimento di Economia, Finanza e Statistica 98/2011, Università di Perugia, Dipartimento Economia.

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