Perspectives on Trade and Structural Transformation

31 Pages Posted: 26 Apr 2021 Last revised: 23 Jun 2022

See all articles by George A. Alessandria

George A. Alessandria

National Bureau of Economic Research (NBER); University of Rochester - Department of Economics

Robert C. Johnson

University of Notre Dame - Department of Economics

Kei-Mu Yi

University of Houston

Date Written: April 2021

Abstract

This paper surveys macroeconomic and microeconomic perspectives on the role of international trade in structural transformation. We start by describing canonical frameworks that have been used to quantify how trade influences sectoral shares of employment and value added. We then pivot to survey micro-empirical evidence on the impact of changes in trade on the allocation of labor across sectors and productivity at the firm level. In this, we put special emphasis on the role of participation in global value chains and inward foreign direct investment in mediating these effects. Next, we evaluate evidence on the barriers to trade faced by low-income countries, with special attention to recent work that measures these costs taking firm dynamics into account. We conclude by discussing how these micro-perspectives can be integrated into macro-models to advance our understanding of structural change.

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Suggested Citation

Alessandria, George A. and Alessandria, George A. and Johnson, Robert C. and Yi, Kei-Mu, Perspectives on Trade and Structural Transformation (April 2021). NBER Working Paper No. w28720, Available at SSRN: https://ssrn.com/abstract=3834160

George A. Alessandria (Contact Author)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
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University of Rochester - Department of Economics ( email )

Harkness Hall
Rochester, NY 14627
United States

Robert C. Johnson

University of Notre Dame - Department of Economics ( email )

Notre Dame, IN 46556
United States

Kei-Mu Yi

University of Houston ( email )

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