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Endowments, Specialization, and Policy

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  • Olivier Cadot
  • Yuliya Shakurova

Abstract

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.

Suggested Citation

  • 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
    DOI: 10.1111/j.1467-9396.2010.00916.x
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    References listed on IDEAS

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    Cited by:

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    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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