Ricardian selection

Andrea Finicelli, Patrizio Pagano () and Massimo Sbracia

MPRA Paper from University Library of Munich, Germany

Abstract: We analyze the foundations of the relationship between trade and TFP in the Ricardian model. Under general assumptions about the autarky distributions of industry productivities, trade openness raises TFP. This is due to the selection effect of international competition --- driven by comparative advantages --- which makes "some" high- and "many" low-productivity industries exit the market. We derive a model-based measure of this effect that requires only production and trade data. For a sample of 41 countries, we find that Ricardian selection raised manufacturing TFP by 11% above the autarky level in 2005 (6% in 1985), with a neat positive time trend and large cross-country differences.

Keywords: selection effect; Eaton-Kortum model; international competition (search for similar items in EconPapers)
JEL-codes: D24 F1 O4 (search for similar items in EconPapers)
Date: 2009-08
New Economics Papers: this item is included in nep-com and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Related works:
Journal Article: Ricardian selection (2013)
Working Paper: Ricardian selection (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:16950

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