The Empirical Dynamics of Comparative Advantage

Researchers: Gordon Hanson (UC San Diego) and Marc Muendler (UC San Diego) 
Location: United States

In recent years, economists have developed powerful theoretical tools to explain the pattern of trade flows for the world's countries and industries. However, relatively little work has explored how those trade patterns evolve over time and how underlying productivities shape the 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. Results suggest that our framework has strong explanatory power across countries at widely different levels of development.