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Criss-Crossing Globalization: Uphill Flows of Skill-Intensive Goods and Foreign Direct Investment

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  • Aaditya Mattoo
  • Arvind Subramanian

Abstract

This paper documents an unusual and possibly significant phenomenon: the export of skills, embodied in goods, services or capital from poorer to richer countries. A set of stylized facts is presented. Using a measure which combines the sophistication of a country’s exports with the average income level of destination countries, it is shown that the performance of a number of developing countries, notably China, Mexico and South Africa, matches that of much more advanced countries, such as Japan, Spain and USA. Creating a new combined dataset on FDI (covering greenfield investment as well as mergers and acquisitions) it is shown that flows of FDI to OECD countries from developing countries like Brazil, India, Malaysia and South Africa as a share of their GDP, are as large as flows from countries like Japan, Korea and the US. Then, taking the work of Hausmann et al. (2007) as a point of departure, it is suggested that it is not just the composition of exports but their destination that matters.

Suggested Citation

  • Aaditya Mattoo & Arvind Subramanian, 2014. "Criss-Crossing Globalization: Uphill Flows of Skill-Intensive Goods and Foreign Direct Investment," Working Papers id:6245, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:6245
    Note: Institutional Papers
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    Cited by:

    1. Javorcik, Beata & Harding, Torfinn, 2009. "A Touch of Sophistication: FDI and Unit Values of Exports," CEPR Discussion Papers 7596, C.E.P.R. Discussion Papers.
    2. Sergey Kondyan & Karine Yenokyan, 2019. "The Effect of Foreign Direct Investment on Economic Growth," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(4), pages 532-564, October.
    3. Arvind Subramanian & Martin Kessler, 2013. "The Hyperglobalization of Trade and Its Future," Working Paper Series WP13-6, Peterson Institute for International Economics.
    4. Sergey Kondyan & Karine Yenokyan, 2019. "Cross-country Knowledge Spillovers and Innovations in Less Developed Countries in the Context of the Schumpeterian Growth Model," Journal of Industry, Competition and Trade, Springer, vol. 19(3), pages 479-500, September.

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    More about this item

    Keywords

    OECD; Japan; globalization; skill-intensive; goods; foreign direct investment; FDI; mergers; acquisition; Japan; Korea and the US; Malaysia; India;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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