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| Author: | Yi, K.-M. |
| Title: | Can vertical specialization explain the growth of world trade? |
| Journal: | Journal of Political Economy
2003 : FEB, VOL. 111:1, p. 52-102 |
| Index terms: | Trade Tariffs Models Growth World economy |
| Language: | eng |
| Abstract: | The striking growth in the trade share of output is one of the most important developments in the world economy since World War II. The standard explanation for this growth is the worldwide tariff reductions that have occurred. Nevertheless, there are features of the growth of trade that present challenges to the standard models. This paper develops a two-country dynamic Ricardian trade model that offers a resolution of these puzzles. The key idea embedded in this model is vertical specialization, which occurs when countries specialize only in particular stages of a goods production sequence. |
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