Product specialization in international trade : a further investigation

Pham, Cong S. 2008, Product specialization in international trade : a further investigation, Journal of international economics, vol. 75, no. 1, pp. 214-218.

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Title Product specialization in international trade : a further investigation
Author(s) Pham, Cong S.
Journal name Journal of international economics
Volume number 75
Issue number 1
Start page 214
End page 218
Publisher Elsevier B.V.
Place of publication Amsterdam, Netherlands
Publication date 2008-05
ISSN 0022-1996
1873-0353
Keyword(s) China
Heckscher–Ohlin model
international trade
multiple sourcing
product specialization
Summary In an influential paper, Schott [Schott. Peter K. (2004). “Across-product versus within-product specialization in international trade.” Quarterly Journal of Economics, 119 (2): 647–678] makes two empirical observations about U.S. imports. (1) The United States is increasingly sourcing the same product (however narrowly defined) from both developed and developing countries. That is, ‘across-product specialization’ has been decreasing. (2) The unit values of these multiple-sourced products are positively and significantly correlated with the capital and skill abundance of exporters and with the capital–labor ratios used by exporters. That is, endowments-driven ‘within-product specialization’ has been increasing. We show that both these observations extend to the imports of Brazil, India and Japan. However, our main finding is that observation (1) is largely driven by two factors. First, China is the dominant low-wage exporter of multiple-sourced products. Second, the most developed countries remain the primary exporters of multiple-sourced products. The U.S. case is the most extreme of our four importers: When China is deleted from the U.S. import data there is no trend in across-product specialization and rich exporters are increasing their trade share of multiple-sourced products. Since deleting China has no theoretical justification, these results must be viewed not as a contradiction of Schott's work but as a way of deepening our understanding of his empirical results.
Language eng
Field of Research 140210 International Economics and International Finance
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2008, Elsevier B.V.
Persistent URL http://hdl.handle.net/10536/DRO/DU:30017220

Document type: Journal Article
Collection: School of Accounting, Economics and Finance
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