search query: @indexterm INTERNATIONAL TRADE / total: 2170
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Author: | Do, Q-T. Levchenko, A.A. |
Title: | Comparative advantage, demand for external finance, and financial development |
Journal: | Journal of Financial Economics
2007 : DEC, VOL. 86:3, p. 796-834 |
Index terms: | comparative advantage finance demand international trade models |
Freeterms: | trade patterns |
Language: | eng |
Abstract: | This paper analyzes the effect of comparative advantage (hereafter as: cmp-advg.) in international trade on a country's level of financial development (here as: fin-dev). Countries with cmp-advg. in financially intensive goods experience a higher demand for external finance (as: ext-fin.), and hence fin-dev. By contrast, fin-dev. is lower in countries primarily exporting goods which do not rely on ext-fin. Disaggregated trade data is used to develop a measure of a country's ext-fin. need of exports. This effect is empirically demonstrated. A novel instrumentation strategy based on the exogenous geographic determinants of trade patterns is developed. |
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