Stages of Diversification

Jean Imbs and Romain Wacziarg

No 2642, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This Paper studies the evolution of sectoral labour concentration in relation to the level of per capita income. We show that various measures of sectoral concentration follow a U-shaped pattern across a wide variety of data sources: countries first diversify, in the sense that labour is spread more equally across sectors, but there exists, relatively late in the development process, a point at which they start to specialize again. We introduce a model with endogenous costs of trading internationally that provides an explanation for this new empirical fact. The model highlights a trade-off between the benefits of diversification in the context of high trading costs, and the benefits of specialization in a Ricardian sense.

Keywords: Specialization; International macroeconomics; International trade; Comparative advantage (search for similar items in EconPapers)
JEL-codes: F15 F43 O40 (search for similar items in EconPapers)
Date: 2000-12
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Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Stages of Diversification (2003)
Working Paper: Stages of Diversification (2003)
Working Paper: Stages of Diversification (2000)
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