Year: 2016
Type: article
Abstract: We explore the relation between a country’s income and the mix of products it exports. Both are simultaneously determined by countries’ capabilities, that is, 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, meaning that there is comparative advantage. (2) Imperfect competition allows high- and low-quality producers to coexist. These two features generate an inverted-U, general equilibrium relationship between a country’s export mix and its GDP per capita. We show that this inverted-U permeates the international data on trade and GDP per capita.
Source: Journal of Political Economy
DOI: 10.1086/686034
Authors: John Sutton, Daniel Trefler
Language: English
Topic: Global trade and economics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2345375244