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Structural Change in OECD Comparative Advantage

53 Pages Posted: 4 May 2010  

Steven Brakman

University of Groningen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Robert Inklaar

University of Groningen - Department of Economics

Charles van Marrewijk

Utrecht University - Utrecht University School of Economics; International Business School Suzhou at XJTLU

Date Written: April 2010

Abstract

In the post-war period, the goods composition of trade in OECD countries has changed considerably. We analyze the evolution of comparative advantage using a detailed trade data set and a new analytical tool: the harmonic (weighted) mass index, which enables us to identify periods of structural change. We then analyze which forces may be responsible for the main structural changes, which primarily took place in many OECD countries in the mid 1980s. We argue that neither the rise of China and India nor the deregulation programs in many OECD countries is likely to have been the main cause. Instead, the interaction between the real and monetary economy (possibly fuelled by nominal rigidities and delays in exchange rate pass through) as measured by the large swing in the real effective exchange rate of the dollar in the 1980s is our primary candidate. In view of similar recent large swings, we argue it is likely that the OECD countries will again go through substantial structural adjustments in the near future.

Keywords: Balassa-index, structural change, comparative advantage

JEL Classification: F14, O50

Suggested Citation

Brakman, Steven and Inklaar, Robert and van Marrewijk, Charles, Structural Change in OECD Comparative Advantage (April 2010). CESifo Working Paper Series No. 3033. Available at SSRN: https://ssrn.com/abstract=1599412

Steven Brakman (Contact Author)

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 50 363 3746 (Phone)
+31 50 363 3730 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Robert Inklaar

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands

Charles Van Marrewijk

Utrecht University - Utrecht University School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
*31-(0)30-2539810 (Phone)

HOME PAGE: http://www.charlesvanmarrewijk.nl

International Business School Suzhou at XJTLU ( email )

26 Xianning W Rd.
Dushu Lake Higher Education Town
Suzhou, Jiangsu Province 215123
China
86 185 5127 3504 (Phone)

HOME PAGE: http://www.xjtlu.edu.cn/en/

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