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The evolution of comparative advantage: Measurement and welfare implications

Listed author(s):
  • Levchenko, Andrei A.
  • Zhang, Jing

Using novel estimates of sectoral total factor productivities for 72 countries across 5 decades we provide evidence of relative productivity convergence: productivity grew systematically faster in initially relatively less productive sectors. These changes have had a significant impact on trade volumes and patterns, and a non-negligible welfare impact. Had productivity in each country׳s manufacturing sector relative to the US remained the same as in the 1960s, trade volumes would be higher, cross-country export patterns more dissimilar, and intra-industry trade lower than in the data. Relative sectoral productivity convergence – holding average growth fixed – had a modest negative welfare impact.

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File URL: http://www.sciencedirect.com/science/article/pii/S0304393216000088
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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 78 (2016)
Issue (Month): C ()
Pages: 96-111

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Handle: RePEc:eee:moneco:v:78:y:2016:i:c:p:96-111
DOI: 10.1016/j.jmoneco.2016.01.005
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

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