Specialization

About This Book

"Specialization alters the incidence of manufacturing trade costs to buyers and sellers, with pro-and anti-globalizing effects on 76 countries from 1990-2002. The structural gravity model yields measures of Constructed Home Bias (the ratio of predicted local trade to predicted frictionless local trade) and the Total Factor Productivity effect of changing incidence. A bit more than half the world's countries experience declining CHB and rising TFP. The correlation between the two is negative but well below perfect. The effects are big for the outliers. A novel test of the structural gravity model shows it comes very close in an economic sense"--National Bureau of Economic Research web site.