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Financial Markets, the Pattern of Specialization and Comparative Advantage. Evidence from OECD countries

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  • Vlachos, Jonas

    (Dept. of Economics, Stockholm School of Economics)

  • Svaleryd, Helena

    (Department of Economics)

Abstract

Due to underlying technological differences, industries differ in their need for external finance. Since the services provided by the financial sector are largely immobile across countries, the pattern of specialization should be influenced by the degree of financial development. We find that this effect is strong: The financial sector has an even greater impact on the pattern of specialization among OECD countries than do differences in human- and physical capital. Further, it gives rise to comparative advantage in a way consistent with the Hecksher-Ohlin-Vanek model. Results on which aspects of financial systems that matter for specialization are also presented.

Suggested Citation

  • Vlachos, Jonas & Svaleryd, Helena, 2001. "Financial Markets, the Pattern of Specialization and Comparative Advantage. Evidence from OECD countries," SSE/EFI Working Paper Series in Economics and Finance 449, Stockholm School of Economics, revised 08 Nov 2001.
    • Handle: RePEc:hhs:hastef:0449
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    3. Luigi Guiso & Tullio Jappelli & Mario Padula & Marco Pagano, 2004. "Financial market integration and economic growth in the EU [‘International measures of schooling years and schooling quality’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 19(40), pages 524-577.
    4. Nathan Nunn, 2007. "Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(2), pages 569-600.
    5. Matias Braun & Claudio Raddatz, 2004. "Trade liberalization and the politics of financial development," Working Papers 04-3, Federal Reserve Bank of Boston.
    6. Marianna Belloc & Samuel Bowles, 2009. "International Trade, Factor Mobility and the Persistence of Cultural-Institutional Diversity," UMASS Amherst Economics Working Papers 2009-08, University of Massachusetts Amherst, Department of Economics.
    7. Yuk Ying Chang & Sudipto Dasgupta, 2002. "What Explains Cross‐country Industry Growth Patterns? Trade, Development and the Equity Financing Channel," International Review of Finance, International Review of Finance Ltd., vol. 3(2), pages 105-129, June.
    8. Moenius, Johannes & Berkowitz, Daniel, 2011. "Law, trade, and development," Journal of Development Economics, Elsevier, vol. 96(2), pages 451-460, November.
    9. Forssbæck , Jens & Oxelheim, Lars, 2008. "Financial Determinants of Foreign Direct Investment," Working Paper Series 741, Research Institute of Industrial Economics.
    10. Cláudio Ribeiro de Lucinda, 2003. "International Trade in Manufactures and Finance," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31st Brazilian Economics Meeting] c39, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    11. Muhammad Mahmud & Gobind M. Herani & Prof. A. W. Rajar, 2009. "Economic Factors Influencing Corporate Capital Structure in Three Asian Countries: Evidence from Japan, Malaysia and Pakistan," Indus Journal of Management & Social Science (IJMSS), Department of Business Administration, vol. 3(1), pages 9-17, June.
    12. Raymond Fisman & Inessa Love, 2007. "Financial Dependence and Growth Revisited," Journal of the European Economic Association, MIT Press, vol. 5(2-3), pages 470-479, 04-05.
    13. Johannes Moenius & Daniel Berkowitz, 2004. "Institutional Change and Product Composition: Does the Initial Quality of Institutions Matter?," William Davidson Institute Working Papers Series 2004-662, William Davidson Institute at the University of Michigan.
    14. Hattendorff, Christian, 2012. "Do natural resource sectors rely less on external finance than manufacturing sectors?," Discussion Papers 2012/17, Free University Berlin, School of Business & Economics.

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    More about this item

    Keywords

    Financial intermediation; Financial systems; Specialization patterns; Comparative advantage;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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