Do electricity supply constraints matter for comparative advantage?: a neoclassical approach

Hitoshi Sato

No 462, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: This paper examines the extent to which electricity supply constraints could affect sectoral specialization. For this purpose, an empirical trade model is estimated from 1990-2008 panel data on 15 OECD countries and 12 manufacturing sectors. We find that along with Ricardian technological differences and Heckscher-Ohlin factor-endowment differences, productivity-adjusted electricity capacity drives sectoral specialization in several sectors. Among them, electrical equipment, transport equipment, machinery, chemicals, and paper products will see lower output shares as a result of decreases in productivity-adjusted electricity capacity. Furthermore, our dynamic panel estimation reveals that the effects of Ricardian technological differences dominate in the short-run, and factor endowment differences and productivity-adjusted electricity capacity tend to have a significant effect in only the long-run.

Keywords: Developed countries; Electric power; Manufacturing industries; Technology; Productivity; International trade; Factor endowments; GDP function; Comparative advantage; Electricity (search for similar items in EconPapers)
JEL-codes: F1 F11 Q40 (search for similar items in EconPapers)
Date: 2014-03-01
New Economics Papers: this item is included in nep-eff, nep-ene and nep-int
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 462. 2014-03-01

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