What Goods Do Countries Trade? A Quantitative Exploration of Ricardo's Ideas

By Arnaud Costinot, David J. Donaldson, Ivana Komunjer. 2012

596 citations recorded by the source corpus.

The Ricardian model predicts that countries should produce and export relatively more in industries in which they are relatively more productive. Though one of the most celebrated insights in the theory of international trade, this prediction has received little attention in the empirical literature since the mid-1960s. The main reason behind this lack of popularity is the absence of clear theoretical foundations to guide the empirical analysis. Building on the seminal work of Eaton and Kortum ("Technology, Geography, and Trade", Econometrica, 70, 1741--1779 2002), we offer such foundations and use them to quantify the importance of Ricardian comparative advantage. In the process, we also provide a theoretically consistent alternative to Balassa's (1965, "An Empirical Demonstration of Classical Comparative Cost Theory", Review of Economics and Statistics, 45, 231--238) well-known index of "revealed comparative advantage". Copyright 2012, Oxford University Press.

Subfields: Economics and Econometrics, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/7c231c996e8d3422ff6137bc9dc31204b1312558

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Citations in the corpus

The Impact of Regional and Sectoral Productivity Changes on the U.S. Economy (2014, unknown): “…effects arising from reduced differences in fundamental productivity across sectors and countries (Caselli, Koren, Lisicky, and Tenreyro, 2012, Costinot, Donaldson, and Komunjer, 2012, Levchenko and Zhang, 2012), and the spillover effects from productivity growth in China (Hsieh and Ossa,…”
From micro to macro: Demand, supply, and heterogeneity in the trade elasticity ☆ (2017, unknown): “Costinot et al. (2012) use industry-level data for OECD countries, and obtains a preferred elasticity of −6.53 relying on producer prices of the exporter as the identifying variable.4 Our paper has consequences for how to interpret those numbers in terms of underlying structural parameters.”
Estimates of the Trade and Welfare Effects of NAFTA (2012, unknown): “Costinot et al. (2012) consider the case of more general distributions.”
Revealed comparative advantage: What is it good for? (2017, unknown): “If all values of Xkni are positive, a geometric average is numerically equivalent to the Costinot et al. (2012) measure.”
New revealed comparative advantage index: Dataset and empirical distribution (2014, methodology): “The theoretically consistent measure of Ricardian RCA proposed by Costinot et al. (2012) is able to isolate the exporter-sector specific factors that drive trade flows, and thus it corresponds to the original concept of the Ricardian comparative advantage.”
A Global View of Productivity Growth in China (2016, unknown): “11 Donaldson et al. (2012) adjust for selection effects in a similar fashion when estimating industry productivities.”