Finance, Comparative Advantage, and Resource Allocation

Melise Jaud, Madina Kukenova and Martin Strieborny

Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie

Abstract: The paper examines the interplay between financial development and comparative advantage in shaping the survival of exporting firms on foreign markets. Exports suffering from comparative disadvantage (labour-intensive products from capital-abundant countries) survive shorter on the competitive US market. Crucially, the pattern is stronger if the exporting country has a well-developed banking system. This suggests a positive role for finance in pushing the manufacturing sector towards export composition congruent with the comparative advantage of a given country. A strong financial sector can thus mitigate misallocation of resources arising from inefficient exporting patterns.

Keywords: financial development; resource misallocation; comparative advantage (search for similar items in EconPapers)
JEL-codes: F11 G21 O16 (search for similar items in EconPapers)
Pages: 21 pages + appendix and tables
Date: 2010-11
New Economics Papers: this item is included in nep-cis and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.hec.unil.ch/deep/textes/10.16.pdf (application/pdf)

Related works:
Journal Article: Finance, Comparative Advantage, and Resource Allocation (2018)
Working Paper: Finance, Comparative Advantage, and Resource Allocation (2013)
Working Paper: Finance, Comparative Advantage, and Resource Allocation (2013)
Working Paper: Finance, comparative advantage, and resource allocation (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:lau:crdeep:10.16

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