How many dimensions do we trade in ? product space geometry and latent comparative advantage
This paper proposes a new quantitative implementation of Balassa's idea that export composition and revealed comparative advantage inform the relationship between endowments in domestic factors of production and exports. It proposes that the export composition of countries is close to a low-dimensional manifold or"Product Space"within the space of export composition, which has as many dimensions as product lines. The Product Space corresponds to a few latent endowments explaining the structure of the trade matrix. The model uses non-linear techniques to identify the product space from the 2010 export matrix of 128 countries and 61 products, and to estimate the latent factors of endowments by country. It formalizes a concept of latent comparative advantage, which has practical country specific applications, relevant for"trade competitiveness"policies. Compared with classical revealed comparative advantage, the model assesses how well countries are matching their potential implied by the latent variables, and also identifies products for which the latent advantage is not yet revealed (extensive margin). The data suggests that the degree of overlap between latent and revealed advantage is a metric of"trade competitiveness."
|Date of creation:||01 Jun 2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hausmann, Ricardo & Hwang, Jason & Rodrik, Dani, 2006.
"What You Export Matters,"
CEPR Discussion Papers
5444, C.E.P.R. Discussion Papers.
- Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2005. "What You Export Matters," NBER Working Papers 11905, National Bureau of Economic Research, Inc.
- Hausmann, Ricardo & Hwang, Jason & Rodrik, Dani, 2005. "What You Export Matters," Working Paper Series rwp05-063, Harvard University, John F. Kennedy School of Government.
- Richard Baldwin & Anthony Venables, 2010.
"Spiders and snakes: offshoring and agglomeration in the global economy,"
NBER Working Papers
16611, National Bureau of Economic Research, Inc.
- Baldwin, Richard & Venables, Anthony J., 2013. "Spiders and snakes: Offshoring and agglomeration in the global economy," Journal of International Economics, Elsevier, vol. 90(2), pages 245-254.
- Baldwin, Richard & Venables, Anthony J, 2010. "Spiders and Snakes: Offshoring and Agglomeration in the Global Economy," CEPR Discussion Papers 8163, C.E.P.R. Discussion Papers.
- McMillan, Margaret & Rodrik, Dani, 2012.
"Globalization, structural change, and productivity growth:,"
IFPRI discussion papers
1160, International Food Policy Research Institute (IFPRI).
- Margaret S. McMillan & Dani Rodrik, 2011. "Globalization, Structural Change and Productivity Growth," NBER Working Papers 17143, National Bureau of Economic Research, Inc.
- Balassa, Bela, 1986. "Comparative Advantage in Manufactured Goods: A Reappraisal," The Review of Economics and Statistics, MIT Press, vol. 68(2), pages 315-19, May.
- Nathan Nunn, 2007.
"Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade,"
The Quarterly Journal of Economics,
MIT Press, vol. 122(2), pages 569-600, 05.
- Nathan Nunn, 2005. "Relationship Specificity, Incomplete Contracts and the Pattern of Trade," International Trade 0512018, EconWPA.
- Nunn, Nathan, 2007. "Relationship-Specificity, Incomplete Contracts, and the Pattern of Trade," Scholarly Articles 4686801, Harvard University Department of Economics.
- J. Peter Neary, 2005.
200521, School of Economics, University College Dublin.
- Joao Santos Silva & Silvana Tenreyro, 2005.
"The Log of Gravity,"
CEP Discussion Papers
dp0701, Centre for Economic Performance, LSE.
- Santos Silva, J.M.C & Tenreyro, Silvana, 2005. "The Log of Gravity," CEPR Discussion Papers 5311, C.E.P.R. Discussion Papers.
- Joao Santos Silva & Silvana Tenreyro, 2005. "The log of gravity," LSE Research Online Documents on Economics 3744, London School of Economics and Political Science, LSE Library.
- Hausmann, Ricardo & Klinger, Bailey, 2006. "Structural Transformation and Patterns of Comparative Advantage in the Product Space," Working Paper Series rwp06-041, Harvard University, John F. Kennedy School of Government.
- Matteo Barigozzi & Giorgio Fagiolo & Diego Garlaschelli, 2009. "Multinetwork of international trade: A commodity-specific analysis," Papers 0908.1879, arXiv.org, revised Jun 2010.
- Jose Guilherme Reis & Thomas Farole, 2012. "Trade Competitiveness Diagnostic Toolkit," World Bank Publications, The World Bank, number 2248.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:6478. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.