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Complexity as a source of comparative advantage

Author

Listed:
  • Asier Minondo

    (Deusto Business School - University of Deusto)

  • Francisco Requena

    (University of Valencia)

Abstract

This paper analyzes whether complexity, measured by the number of skilled tasks that are performed simultaneously in production, explains countries' commodity trade structure. We modify Romalis (2004) model to incorporate differences in complexity across commodities together with differences in average skills across countries and monopolistic competition. Our model predicts that the share of developed countries in world trade increases with products' complexity. The empirical tests confirm this prediction. Moreover, complexity seems to provide a better explanation of countries' commodity trade structure than the one offered only by skill intensity.

Suggested Citation

  • Asier Minondo & Francisco Requena, 2012. "Complexity as a source of comparative advantage," Working Papers 1214, Department of Applied Economics II, Universidad de Valencia.
    • Handle: RePEc:eec:wpaper:1214
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    complexity; skill-intensity; factor proportions; trade structure; specialization.;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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