Deductions from the export basket
Subtitle: capabilities, wealth and trade
By: John Sutton, Daniel Trefler
Contributors: Trefler, Daniel; National Bureau of Economic Research
Series: NBER working paper series -- working paper 16834; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16834.
Publisher: National Bureau of Economic Research
Published: 2011
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "This paper re-explores the relation between a country's level of wealth and the mix of products it exports.  We argue that both are simultaneously determined by countries' capabilities i.e.  by countries' productivity and quality levels for each good.  Our theoretical setup has two features.  (1) Some goods have fewer high-quality producers/countries than others i.e.  there is Ricardian comparative advantage.  (2) Imperfect competition allows high- and low-quality producers to coexist, which we refer to as 'product ranges'.  These two features generate a very particular non-monotonic, general equilibrium relationship between a country's export mix and its wage (GDP per capita).  We show that this non-monotonicity permeates the 1980-2005 international data on trade and GDP per capita.  Our setup also explains two other facets of the data: (1) Product ranges are huge and (2) for the poorest third of countries, changes in export mix substantially over-predict growth in GDP per capita.  This suggests that the main challenge for low-income countries is to raise quality and productivity in their existing product lines"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 5/19/2011.

Includes bibliographical references.

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