Time Zones, Outsourcing and Patterns of International Trade
This paper proposes a three-country model of business services trade that captures the role of time zones in the division of labor. The connectivity of business service sectors via communications networks (e.g., the Internet) is found to determine the structure of comparative advantage. That is, two countries with connected service sectors have a comparative advantage in the good that requires business services. It is also shown that the third country inevitably specializes in the good that does not require business services.
Volume (Year): 6 (2006)
Issue (Month): 15 ()
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- Toru Kikuchi, 2003. "Interconnectivity of communications networks and international trade," Canadian Journal of Economics, Canadian Economics Association, vol. 36(1), pages 155-167, February.
- Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.