Complexity as a source of comparative advantage

Asier Minondo () and Francisco Requena Silvente

No 1214, Working Papers from Department of Applied Economics II, Universidad de Valencia

Abstract: This paper analyzes whether complexity, measured by the number of skilled tasks that are performed simultaneously in production, explains countries' commodity trade structure. We modify Romalis (2004) model to incorporate differences in complexity across commodities together with differences in average skills across countries and monopolistic competition. Our model predicts that the share of developed countries in world trade increases with products' complexity. The empirical tests confirm this prediction. Moreover, complexity seems to provide a better explanation of countries' commodity trade structure than the one offered only by skill intensity.

Keywords: complexity; skill-intensity; factor proportions; trade structure; specialization. (search for similar items in EconPapers)
JEL-codes: F11 F12 F14 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2012-09
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:eec:wpaper:1214

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