Unpacking Sources of Comparative Advantage: A Quantitative Approach

By D. Chor. 2010

397 citations recorded by the source corpus.

This paper develops an approach for quantifying the importance of different sources of comparative advantage, by extending the Eaton and Kortum (2002) model to predict industry trade flows. In this framework, comparative advantage is determined by the interaction of country and industry characteristics, with countries specializing in industries whose production needs they can best meet with their factor endowments and institutional strengths. I estimate the model parameters using: (i) OLS; and (ii) a simulated method of moments procedure that accounts for the prevalence of zeros in the bilateral trade data. I apply the model to explore various quantitative questions, such as how much distance, Ricardian productivity, factor endowments, and institutions each matter for country welfare in the global trade equilibrium.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/2b8f6870156ef07aad00082a2aa40fbd9ce16f02

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Citations in the corpus

The Evolution of Comparative Advantage: Measurement and Welfare Implications (2011, positive): “To overcome this problem, we use the methodology developed by Eaton and Kortum (2002), and extended to a multi-sector framework by Shikher (2004), Chor (2010), and Costinot and Komunjer (2008), among many others.”
New revealed comparative advantage index: Dataset and empirical distribution (2014, background): “In the last few years, since the seminal paper by Eaton and Kortum (2002),2 we have seen a renewed interest in empirical works on the sources of comparative advantages - Chor (2010), Kerr (2009), Levchenko and Zhang (2011). But nothing has been done (to our knowledge) in improving synthetic empirica”
Relationship-Specificity, Contract Enforceability, and Income Smoothing (2013, background): “Furthermore, many other authoritative studies provide support for Nunn’s measure in various contexts, further validating its legitimacy (e.g., Ciccone and Papaioannou 2009; Cristea 2011; Casaburi and Minerva 2011; Chor 2010; Costinot, Oldenski, and Rauch 2011; Ma, Qu, and Zhang 2010; Acemoglu, Johns”
Trade and Capital Flows: A Financial Frictions Perspective (2009, methodology): “This theoretical result is consistent with the ﬁ ndings of Manova (2008), who provides empirical evidence suggesting that, controlling for several factors, ﬁ nancially developed countries indeed tend to feature disproportionately high export volumes in the set of industries that Rajan and Zingales (”
Robots, Tasks and Trade (2018, neutral): “…aspects of globalization for welfare and income distribution, including influential contributions by Yi (2003), Dekle, Eaton, and Kortum (2008), Chor (2010), Waugh (2010), Fieler (2011), Arkolakis, Costinot, and Rodriguez-Clare (2012), Ramondo and Rodriguez-Clare (2013), Caliendo and Parro…”
The Impact of Regional and Sectoral Productivity Changes on the U.S. Economy (2014, neutral): “Having solved for the distribution of prices, when sector j is tradeable, the price of final good j in region n is given by P j n = Γ ( ξn )1−ηjn [∑N i=1 [ xjiκ j ni ]−θj ( T j i )θjγji]−1/θj , (12) where Γ ( ξn ) is a Gamma function evaluated at ξn = 1 + ( 1− ηn ) /θ .”
Trade Adjustment: Worker Level Evidence (2014, positive): “…how productivity growth in China may affect U.S. industries, we apply the Eaton and Kortum (2002) model of trade in a multisectoral setting (e.g., Chor, 2010; Shikher, 2011).18 Using their framework, total output by U.S. industry j, Quj , can be written as as the sum in demand for U.S. goods…”
New Trade Models, Same Old Gains? (2012, neutral): “Bernard, Redding, and Schott (2007a) and Chor (2009). In the Appendix, we analyze the case where there are two factors of production, capital and labor, and production functions are Cobb-Douglas in all sectors.”
Services trade policy and manufacturing productivity: The role of institutions (2017, methodology): “He uses a world-average trade restrictiveness measure for each service sector, with the sector-level component of the countrysector interaction term representing regulatory capacity, in line with the methodology proposed by Chor (2010), whereas we use country-level policy measures to identify and qu”
Determinants of Global Value Chain Participation: Cross-Country Evidence (2020, positive): “Countries with larger natural resources endowments export more 39Our cross-country cross-sector specication follows closely the Nunn (2007) and Chor (2010) comparative advantage models that explain trade ows in levels. We use it for GVC participation in levels but not for GVC participation as a sh”
Estimates of the Trade and Welfare Effects of NAFTA (2012, neutral): “For instance Arkolakis, et al. (2012), Caliendo and Parro (2010), Chor (2010), Costinot, Donaldson, and Komunjer (2012), Donaldson (2012), Dekle, Eaton and Kortum (2008), Eaton, Kortum, Neiman, and Romalis (2011), Hsieh and Ossa (2011), and Shikher (2011).10 Our paper differs from these studies in…”