Globalization and the Ladder of Development: Pushed to the Top or Held at the Bottom?

David Atkin, Arnaud Costinot and Masao Fukui

No 29500, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the relationship between international trade and development in a model where countries differ in their capability, goods differ in their complexity, and capability growth is a function of a country’s pattern of specialization. Theoretically, we show that it is possible for international trade to increase capability growth in all countries and, in turn, to push all countries up the development ladder. This occurs because: (i) the average complexity of a country’s industry mix raises its capability growth, and (ii) foreign competition is tougher in less complex sectors for all countries. Empirically, we provide causal evidence consistent with (i) using the entry of countries into the World Trade Organization as an instrumental variable for other countries’ patterns of specialization. The opposite of (ii), however, appears to hold in the data. Through the lens of our model, these two empirical observations imply dynamic welfare losses from trade that are small for the median country, but pervasive and large among a number of African countries.

JEL-codes: F1 O1 O4 (search for similar items in EconPapers)
Date: 2021-11
New Economics Papers: this item is included in nep-gro and nep-int
Note: DEV ITI
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.nber.org/papers/w29500.pdf (application/pdf)

Related works:
Working Paper: Globalization and the Ladder of Development: Pushed to the Top or Held at the Bottom? (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:29500

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w29500

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().