Empirical Dynamics of Comparative Advantage
In recent years, economists have developed powerful theoretical tools to explain the role of firms in international trade. However, relatively little work has explored how firms’ productivity evolves over time or how this shapes global trade dynamics. This project helps fill this gap in the literature, while illuminating recent shifts in global trade patterns. It develops an empirical framework to characterize the dynamics of countries’ export performance. As China, India, and other emerging economies rise to be major economic players, comparative advantage is becoming an increasingly important driver of global trade. We seek to learn either about the pace at which emerging-economy export capabilities are evolving or about the forces responsible for their trade dynamism.
The empirical tools resulting from this work are widely applicable to the study of international trade. Preliminary results suggest that our framework has strong explanatory power across countries at widely different levels of development.