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Trade in intermediate goods and the division of labor

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  • Soo, Kwok Tong

Abstract

This paper develops a model of international trade based on the division of labor and comparative advantage. Labor is used to produce traded intermediate inputs which are used in the production of traded final goods. Large countries gain relatively more from comparative advantage than from the division of labor, while the opposite is true for small countries. Large countries export a smaller share of final goods and a larger share of intermediate goods than small countries. These predictions find supportive evidence in the data.

Suggested Citation

  • Soo, Kwok Tong, 2014. "Trade in intermediate goods and the division of labor," MPRA Paper 57065, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:57065
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Division of labor; Comparative advantage; gains from trade; intermediate goods trade;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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    This paper has been announced in the following NEP Reports:

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