TY  - JOUR
AU  - Krishna,Pravin
AU  - Levchenko,Andrei A.
TI  - Comparative Advantage, Complexity and Volatility
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14965
PY  - 2009
Y2  - May 2009
UR  - http://www.nber.org/papers/w14965
L1  - http://www.nber.org/papers/w14965.pdf
N1  - Author contact info:
Pravin Krishna
Johns Hopkins University
1740 Massachusetts Avenue, NW
Washington, DC 20036
Tel: 202/663 5733
Fax: 202/663 7718
E-Mail: Pravin_Krishna@jhu.edu

Andrei Levchenko
Department of Economics
University of Michigan
611 Tappan Street
Ann Arbor, MI 48109
Tel: 734/764-3296
E-Mail: alev@umich.edu
AB  - Less developed countries tend to experience higher output volatility, a fact that is, in part, explained by their specialization in more volatile sectors. This paper proposes theoretical explanations for this pattern of specialization -- with the complexity of the goods playing a central role. Specifically, less developed countries with low levels of human capital, or alternately, with lower institutional ability to enforce contracts, will specialize in less complex goods which are also characterized by higher levels of output volatility. We provide novel empirical evidence that less complex industries are indeed more volatile.
ER  -