Technological specialization in industrial countries: Patterns and dynamics

Technological Specialization in Industrial Countries: Patterns and Dynamics. — This paper employs distribution dynamics and patent data to study the empirical dynamics of technological specialization in industrial countries. Large countries spread innovation activities across a wider range of technologies, and their specialization level in a field displays lower probability to move around its initial level (country size effects). Mobility is high and asymmetric: it is difficult to improve specialization in very disadvantaged technologies, while high comparative advantages revert towards lower specialization levels. These findings undermine the theory of technological accumulation and path dependence, its implication of persistence in trade specialization patterns and the effectiveness of targeted industrial and technology policies.     

Trade policy and specialization in developing countries

This paper examines the impact of trade policy on specialization patterns in ten Latin American countries over the period 1985–1998. These countries are natural case studies because in the last decades they implemented comprehensive trade liberalization programs, both generally and preferentially, starting from relatively high tariff protection levels. Our econometric results suggest that reducing own most favored nation tariffs is associated with increasing manufacturing production specialization. Furthermore, we find that preferential trade liberalization and differences in the degree of unilateral openness have resulted in increased dissimilarities in manufacturing production structures across countries. These results are robust across specialization measures and estimation methods.

Specialization and Welfare in the Presence of Imperfectly Integrated Capital Markets and Learning-by-doing

We study a two-sector, two-period model with learning externalities in the modern sector and imperfectly integrated capital markets. We find that higher capital market integration lowers the requirements on the learning pattern necessary for free trade to lead to an equilibrium with maximal specialization in modern sector activities. We further find that the equilibrium with maximal specialization in modern sector activities Pareto dominates, if it exists, any other free trade equilibrium, and that autarky can Pareto dominate free trade if capital markets are poorly integrated, even when there is maximal specialization in modern sector activities under free trade.

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ECFA的建立与海峡两岸垂直分工模式

通过计算中国大陆加入WTO以来中国大陆出口的垂直专业化比率,以及东亚各经济体的中间产品的来料比率及其贡献,本文发现,无论是在出口总量上,还是在台湾地区出口到中国大陆的主要产品,其对中国大陆垂直专业化的贡献程度从2002年以来一直在下降。这表明中国大陆不断深化的开放并没有促进海峡两岸产业链的进一步深化,相反,受此前台湾的"戒急用忍"政策所至,海峡两岸产业互补性垂直分工减弱。进一步采用GTAP模型模拟中国大陆参与东亚区域贸易自由化的各种不同场景,结果显示,通过ECFA参与中国大陆区域贸易自由化进程的三种模式均有利于提高台湾来料对大陆出口垂直专业化的贡献度,有利于台湾走出在东亚分工体系中被边缘化的困境,优化海峡两岸产业垂直分工体系。反之,如果中国大陆率先与其他东亚国家实现全面贸易自由化,会给两岸产业垂直分工模式带来一定的负面影响。     

Specialization patterns in Europe

Specialization Patterns in Europe. — This paper analyzes whether specialization has increased in European Union countries, and discusses whether specialization patterns are consistent with predictions of trade theory. There is evidence of increasing specialization in some EU countries between 1968 and 1990, and some industries have become more concentrated geographically. The observed pattern of specialization broadly follows trade theory. In particular, those industries that have become more concentrated geographically are characterized by high scale economies and high intermediate-goods intensity, providing some support for new trade theories.     

Production Structure in the Context of International Trade

This paper deals with the recent empirical phenomenon of intra-industry trade, i.e., trade in similar goods between similar countries. It treats this phenomenon from the point of view of the theory of the structure of production, highlighting the importance of the sequential nature of production and the heterogeneity and specificity of factors of production, as developed by Carl Menger, Eugen von Böhm-Bawerk and their followers of the Austrian School of economics. The reader is first exposed to the historical development of production and capital theory. A simple theory of production structure, along the lines of Austrian economics, is afterwards presented and a useful tool for the analysis of intra-industry trade is developed. In the following discussion of existing theories of intra-industry trade, we make the case for vertical intra-industry specialization, complex manufactured goods and sliced-up production chains across countries. The reader immediately observes the importance of Austrian production structure theory for the analysis of intra-industry trade. We accordingly apply the concepts of the structure of production to intra-industry trade and analyze, in particular, the time- and place-aspects of international production. The concluding section shows the relevance of our approach to intra-industry trade for the analysis of business cycle synchronization across countries, and for the optimum currency areas theory.     

产品内分工理论研究回顾与展望

产品内分工是经济全球化背景下国际分工和国际贸易发展的一种新的概念、方式和机制,是当代国际贸易理论与实践发展中一个新现象、新问题。研究和探讨产品内分工的演进、特点和规律,对于解读当代国际分工的深化和贸易的扩张,解读当代中国对外贸易发展和经济成长,具有重要的理论意义和实践意义。     

Trade Verticality and Structural Change in Industries:The Cases of Taiwan and South Korea

This paper documents that a significant portion of trade for Taiwan and Korea follows the trend of world trade in moving toward a pattern of vertical specialization (VS). Noteworthy is the manufacturing sector, whose VS shares of exports has been steadily increasing and has accounted for more than 90% of the total VS shares of manufactured exports. For Taiwan, nearly 57% of the growth in exports is contributed by the growth in VS-based trade; for Korea, it is as high as 64%. In the analysis, we compare VS shares of exports with or without input-output circulation among domestic industries in an open economy. Using Taiwan as a case study, we further discuss the implications of trade liberalization through tariff reductions for trade verticality. JEL Classification Numbers: F1, F14     

Trade liberalization,wages, and specialization in China

This paper studies the evolution of regional specialization in China in response to trade liberalization. Using a panel of Chinese export data at the detailed commodity level over the period of 1988–2006, we show that China’s regional specialization follows a U-shaped pattern: both the interior and coastal regions diversify from 1988 to 1994 but specialize during the later reform period of 1994–2006. A theory of tariff reductions is proposed by constructing the Dornbusch–Fischer–Samuelson (1977) continuum of goods Ricardian model in a setup of two countries and three regions. The U-shaped pattern of specialization can be obtained from foreign tariff reductions followed by Chinese tariff reductions. This finding is supported by simulations, US–China trade policy review, and the pattern of China’s coast–inland wage ratio.     

国际垂直专业化分工与贸易:研究综述

国际垂直专业化是第二次经济全球化高潮的显著特征,国际分工与贸易的对象深入到工序层面,参与国的国民福利与收入分配以及世界贸易的性质、规模等都因此受到重要影响。对国际垂直专业化的研究使标准贸易理论的研究视野由产品间分工扩展到产品内分工,并且,产业组织与契约理论的相关概念被引入贸易模型,形成了新的分析框架。本文对该领域研究的内容、方法与结论做了归纳,就国际垂直专业化分工与贸易的基础和动因、程度度量以及经济效应分析三个方面的问题加以评述,并指明未来研究方向。     

Vertical Specialization and Trade Growth in Northeast Asia

As the global economy has become further integrated, the international production chain has become more sophisticated, with diversified stages of production located in different countries. Economic theorists have argued that the fragmentation of the global production chain is partly attributable to the high growth in international trade over the past several decades. In this study, we examine vertical specialization in China, Japan and Korea, and its contribution to these nations' trade. Using a multilevel model, it is illustrated that vertical specialization has encouraged increases in trade among all three countries. In particular, China's outcome is remarkable considering how recently it became a member of the WTO.     

台海两岸ICT制造业的贸易模式及其决定因素分析

本文基于中国台湾1993～2010年的贸易数据对台海两岸信息通信科技(ICT)制造业最终产品和零部件贸易模式进行解析,研究结果显示:台海两岸ICT制造业的贸易模式逐步从20世纪90年代以产业间贸易为主转变为21世纪以产业内贸易为主,这一点在零部件贸易中表现得尤为突出;无论是最终产品还是零部件,台海两岸ICT产品产业内贸易都以垂直产业内贸易为主,并且零部件产业内贸易中垂直产业内贸易所占比重明显高于最终产品;进一步分析ICT产品垂直产业内贸易中台湾的相对技术优势发现,无论是在最终产品还是零部件垂直产业内贸易中,台湾对大陆出口的高技术含量产品均占据优势份额且呈迅速上涨趋势。台海两岸ICT制造业的产业内贸易模式的实证检验表明,两岸ICT零部件的产业内贸易主要是由驱动ICT全球性生产网络发展的垂直专业分工链条的分解所导致,而ICT最终产品的产业内贸易则主要是由市场规模等需求性因素所导致。     

Estimating the economic cost of China's new desulfur policy during her gradual accession to WTO: The case of industrial SO2 emission

To understand the potential impacts of China's accession to WTO on her new desulphur policy (gradual reduction of 10% of annual SO₂ emission by 2005 with respect to that of 2000), we construct a CGE model in which SO₂ emission is directly linked to energy input consumption in production. The model equally considers the substitution possibility between energies of different SO₂ effluent ratios by including energy as labor and capital in the constant elasticity of transformation production function. The positive externality of trade in China's economy is also included. This model is then calibrated into a 55-sector Chinese SAM for the year 1997. Four policy simulations (Business as Usual, Openness policy only, desulfur policy only, and the combination of openness and desulfur policy) are made for the period from 1997 to 2005. The results show that the environmental impact of trade, though proven to be “negative”, stays rather modest. This is owing to the industrial composition transformation that deviates the specialization of the Chinese economy towards labor-intensive sectors under the new trade liberalization process. We do not find evidence for the “pollution haven” hypothesis. Seemingly ambitious, the new desulphur policy will only bring small economic growth loss. The pollution reduction objective will be realized mainly by substitution between polluting and less or non-polluting energies. The combination of trade liberalization and pollution control policy seems to give China more flexibility in adapting her economy to the new desulphur objective. Considering these different aspects together, the total economic loss due to the new desulphur policy will be limited to only − 0.26% under the presence of trade liberalization.     

东亚产业内贸易发展状况及原因分析

近年来,东亚地区产业内贸易发展十分迅速。本文对东亚10个主要经济体1992-2005年的产业内贸易发展状况进行了实证分析。研究结果表明,产业内贸易已经成为东亚的主要贸易形式。在各类产品中,机械和运输设备(SITC7)的产业内贸易程度最高,且提高最快。产业内贸易发展的原因在于东亚地区产业内分工的不断深化以及基于生产环节专业化分工的产品零部件贸易的迅速发展。     

Overall trade specialization and economic development: countries diversify

This paper provides evidence for an aspect of trade often disregarded in international trade research: countries’ sectoral export diversification. The results of our semiparametric empirical analysis show that, on average, countries do not specialize; on the contrary, they diversify. Our results are robust for different statistical indices used to measure trade specialization, for the level of sectoral aggregation, and for the level of smoothing in the nonparametric term associated with per capita income. Using a generalized additive model (GAM) with country-specific fixed effects it can be shown that, controlling for countries’ heterogeneity, sectoral export diversification increases with income.

Handbook of New Institutional Economics

Abstract

Recent Scandinavian work on the relationship between exports and economic growth gives preference to home market factors as opposed to foreign demand, thus strengthening the view that growth is home-led rather than export-led. This article claims that the difficulty in determining the causal role of exports stems from the failure to differentiate between individual industries and macro-economic growth. Addressing the macro-aspect, the argument, called the ‘export specialization theory’, is developed that for small countries trade and pro-trade policies have been central to their economic success; moreover; in these cases it makes no sense to distinguish between home-led or foreign-led development, since by definition trade includes both demand and supply factors. In the light of this clarification the current controversy about the causal role of exports for successful growth in small countries disappears. By way of conclusion, the article argues that country size may prove to have been a critical variable in successful economic growth.     

How Does the Regional Comprehensive Economic Partnership Affect the Restructuring of Global Value Chains?

This paper quantifies the way in which the Regional Comprehensive Economic Partnership (RCEP) affects the restructuring of global value chains (GVCs). It incorporates an input– output structure into a general equilibrium model, highlighting important differences between intermediates and final goods. Using tariff reduction schedules for the RCEP agreement and Asian Development Bank Multi-Region Input–Output database, it evaluates the impact of the RCEP's tariff cuts on vertical specialization and the GVC position index of members. It shows that the RCEP significantly increased vertical specialization and the weighted average number of stages for members for primary factors of production and final consumption, which led to more complex and longer production chains. This was mainly due to the trade creation in intermediates imported from member countries and those outside it. This is an important finding, distinct from traditional trade models without an input–output structure.     

Openness to Trade and the Potency of Monetary Policy: How Strong is the Relationship?

Economic theory suggests that an economy's openness to international trade reduces the ability of monetary policy to affect output. Using quarterly data from the 1960:1–1993:4 period for a set of eight countries (Australia, Canada, Germany, Italy, Japan, South Africa, the U.K., and the U.S.A.), this article's empirical results support this theoretical prediction: the more open the economy, the smaller the output effects of a given change in the money supply. This finding, robust across all the different specifications and estimation methods examined, has straightforward implications for stabilization policy. Moreover, it suggests that an economy's net benefit from joining a monetary union is increasing with the economy's openness to foreign trade.     

Estimation of the East African Community's trade benefits from promoting intra‐regional trade

In the literature on economic integration, the optimum currency area (OCA) theory says that there should be a high degree of trade between potential members of a monetary union for them to benefit from the use of a single currency. This study uses an augmented gravity model of trade to estimate the East African Community's (EAC) trade effects, as this community decided to participate in a monetary union by 2024. The study uses the fixed effect filter (FEF) estimator, which follows a two‐step approach and outperforms the standard fixed effects (FE) estimator. The results indicate that EAC has the potential to increase trade among partner states by 122% more than expected from the normal trade levels. The study, therefore, supports the ongoing East African Monetary Union process. However, to improve the likelihood of creating a more sustainable monetary union, the study recommends these countries to primarily focus on the full implementation of the customs union and common market steps. The main contribution of this study is that it provides robust estimates of the EAC's effects on intra‐regional trade using more recent data and updated econometric techniques.