NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Evolution of Comparative Advantage: Measurement and Welfare Implications

Andrei A. Levchenko, Jing Zhang

NBER Working Paper No. 16806
Issued in February 2011
NBER Program(s):   IFM   ITI   PR

We estimate productivities at the sector level for 72 countries and 5 decades, and examine how they evolve over time in both developed and developing countries. In both country groups, comparative advantage has become weaker: productivity grew systematically faster in sectors that were initially at greater comparative disadvantage. These changes have had a significant impact on trade volumes and patterns, and a non-negligible welfare impact. In the counterfactual scenario in which each country's comparative advantage remained the same as in the 1960s, and technology in all sectors grew at the same country-specific average rate, trade volumes would be higher, cross-country export patterns more dissimilar, and intra-industry trade lower than in the data. In this counterfactual scenario, welfare is also 1.6% higher for the median country compared to the baseline. The welfare impact varies greatly across countries, ranging from -1.1% to +4.3% among OECD countries, and from -4.6% to +41.9% among non-OECD countries.

download in pdf format
   (792 K)

email paper

This paper was revised on October 10, 2014

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w16806

Published: Levchenko, Andrei A. & Zhang, Jing, 2016. "The evolution of comparative advantage: Measurement and welfare implications," Journal of Monetary Economics, Elsevier, vol. 78(C), pages 96-111. citation courtesy of

Users who downloaded this paper also downloaded* these:
Grossman and Helpman w2809 Comparative Advantage and Long-Run Growth
Hsieh and Ossa w16778 A Global View of Productivity Growth in China
Costinot w14645 An Elementary Theory of Comparative Advantage
Aizenman and Pasricha w16779 Net Fiscal Stimulus During the Great Recession
McMillan and Rodrik w17143 Globalization, Structural Change and Productivity Growth
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us