Keywords
impact
unbalanced economic growth
RSCA
unbalanced economic growth
RSCA
Abstract
This paper examines the impact of unbalanced economic growth upon countries’ dynamic trade specialization. Firstly, we identify theoretically the impact. Secondly, we construct an econometric model to investigate the impact. We employ revealed symmetric comparative advantage (RSCA) index as an indicator of trade specialization and coefficient of variation (CV) of sectoral output growth as an indicator of unbalanced economic growth. Thirdly, we apply empirically the model in the cases of Korea, Singapore, Indonesia and Malaysia. We conclude that domestic unbalanced economic growth has a positive and statistically significant impact on dynamic trade specialization in the cases of Indonesia and Malaysia, but not in the cases of Korea and Singapore. However, the world unbalanced economic growth has a statistically insignificant impact on the all selected countries’ dynamic trade specialization.
References
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_________, E. Comparative Advantage and Long-run Growth. American Economic Review 80 (1990): 796- 815.
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The United Nations (UN). 2007. United Nation Commodity Trade Statistics Database (UN-COMTRADE). [Online; cited on March 11, 2007]. Available from URL:http:// comtrade.un.org/db/default.aspx
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White, H. A Heterosckedasticity-consistent Covariance Matrix and A Direct Test for Heteroskedasticity. Econometrica 48(1980): 817-838.
Wörz, J. Dynamic of Trade Specialization in Developed and Less Developed Countries. Emerging Markets Finance and Trade 41(3):92-22, 2005.
Venables, A.J. Geography and International Inequalities; The Impact of New Technology. Paper Prepared for ABCDE, World Bank, Washington DC, 2001.
Vollrath, T.L. A Theoretical Evaluation of Alternative Trade Intensity Measures of Revealed Comparative Advantage. Weltwirtschaftliches Archiv 127 (1991): 265-80.
Yi, K. Can Vertical Specialization Explain The Growth of World Trade? Journal of Political Economy 111(1):52-102, 2003.
Young, A. Learning by Doing and Dynamic Effects of International Trade. Quarterly Journal of Economics 106 (1991): 365-405.
Aiginger, K. Do Industrial Structures Convergence? A Survey of The Empirical Literature on Specialization and Concentration of Industries”. Vienna: Austrian Institute of Economic Research (WIFO) – Working Paper 116, 1999.
Appleyard, D.R. and Field, A.J.JR. International Economics. Fourth Edition. New York: McGraw-Hill, 2001.
Athukorala, P. and N. Yamashita. Production Fragmentation and Trade Integration: East Asia in A Global Context. North American Journal of Economic and Finance 17(3): 233-256, 2006.
Balassa, B. Trade Liberalization and “‘Revealed” Comparative Advantage. The Manchester School of Economics and Social Studies 33(2): 99-123, 1965.
Chenery, H. and Syrquin, M. Pattern of Development, 1950-1970. Oxford Univ. Press, London, 1975.
_________, Typical Pattern of Transformation. In Chenery, H., Robinson, S., Syrquin, M. (Eds.). Industrialization and Growth: A Comparative Study. Oxford Univ. Press, New York, 1986.
Dowling, M. and Cheang, C.T. “Shifting Comparative Advantage in Asia: New Tests of The ‘Flying Geese’ Model”. Journal of Asian Economics 11 (2000): 443-463.
Echevarria, C. International Trade and The Sectoral Composition of Production. Review of Economic Dynamics 11(2008): 192-206.
Edwards, S. Trade Orientation, Distortions and Growth in Developing Countries. Journal of Economic Development 39(1992): 31-57.
Fouquin, M., D. Hiratsuka and F. Kimura. Introduction: East Asia’s De Facto Economic Integration. In Hiratsuka,
Daisuke (ed.). East Asia’s De Facto Economic Integration. New York: Palgrave Macmillan. pp. 1-15, 2006.
Frankel, J.A., Romer, D., and Cyrus, T. Trade and Growth in East AsianCountries: Cause and Effect? NBER Working Paper No. 5732, Cambridge, 1996.
Fukasaku, K. “Economic Regionalization and Intra-industry trade Pacific- Asian Perspective.” Research Program on Globalization and Regionalization OECD, 1992.
Goh, A. and Oliver, J. Learning by Doing, Trade in Capital Goods and Growth. Journal of International Economics 56(2002): 411-444.
Grossman, G.M. and Helpman, E. Inovation and Growth in the Global Economy. The MIT Press, Cambridge, 1991.
_________, E. Comparative Advantage and Long-run Growth. American Economic Review 80 (1990): 796- 815.
Gujarati, D. Basic Econometrics. New York: McGraw Hill, 2000.
Hecksher, E.F. “The Effect of Foreign Trade on The Distribution of Income”. In Howard S. Ellis and Lloyd A. Metzler, (Eds.). Readings in the Theory of International Trade. American Economic Association. Philadelphia: Blakiston, 1991.
Hummels, D., Ishii, J., and Yi, K. The Nature and Growth of Vertical Specialization in World Trade. Journal of International Economics 54(1):75-96, 2001.
Jones, R.W. Globalization and the Theory of Input Trade. Cambridge: MIT Press, 2000.
Kojima, K. The ‘Flying Geese’ Model of Asian Economic Development:
Origin, Theoretical Extensions, and Regional Policy Implications. Journal of Asian Economics 11 (2000): 375-401.
Krugman, P.R. Increasing Returns, Monopolistic Competition, and International Trade. Journal of International Economics 9 (1979): 469–79.
_________, Growing World Trade: Causes and Consequences. Brooking Papers on Economic Activity 25th Anniversary Issue. pp. 327-77, 1995.
Kuznets, S. Modern Economic Growth: Finding and Reflections. American Economic Review 63 (1973): 247- 258.
Laursen, K. Revealed Comparative Advantage and The Alternatives as Measures of International Specialization. DRUID Working Paper. No 98-30. Danish Research Unit for Industrial Dynamics (DRUID), 1998.
Lucas, R.E. Making A Miracle. Econometrica 61(1993): 251-272.
Matsuyama, K. Increasing Returns, Industrialization and Indeter- minacy of Equilibrium. Quarterly Journal of Economics 106 (1991): 617-650.
Newey, W. and K. West. A Simple Positive Semi-definite, Heteroskedasticity and Autocorrelation Consistent Covariance Matrix. Econometrica 55 (1987): 703-708.
Ng, F. and A. Yeats. Major Trade Trends in East Asia: What Are Their Implications for Regional Cooperation and Growth? Policy Research Working Paper. The World Bank, Development Research Group Trade, June, 2003.
Ohlin, B. Interegional and International Trade. Cambridge, MA: Harvard University Press, 1933.
Rana, P.B. Shifting Comparative Advantage among Asian and Pacific Countries. The International Trade Journal 4 (1990): 243-257.
Redding, S. Specialization Dynamics. Journal of International Economics, 58 (2002): 299-334.
Rivera-Batiz, L.A. and Romer, P.M. Economic Integration and Endogenous Growth. Quarterly Journal of Economics 105 (1991): 531-555.
Romer, P. Increasing Return and Long- run Growth. Journal of Political Economy 94 (1986): 1002-1037.
__________, Endogenous Technical Change. Journal of Political Economy 98 (1990): S71-S102.
Rodrik, D. The ‘Paradoxes’ of The Successful State. European Economic Review 41 (1997): 411-442.
Segerstrom, P.S., Anant, T.C.A. and Dinopoulos, E. A Schumpeterian Model of The Product Life Cycle. American Economic Review 80 (1990): 1077-1092.
Todaro, M. and S. Smith. Economic Development 9th ed. Addison- Wesley series in economics, 2006.
Trefler, D. The Case Missing Trade and Other Mysteries. American Economic Review 85(5):1029-46, 1995.
The United Nations (UN). 2007. United Nation Commodity Trade Statistics Database (UN-COMTRADE). [Online; cited on March 11, 2007]. Available from URL:http:// comtrade.un.org/db/default.aspx
The United Nations Statistics Division (UNSD). 2008. Value Added by Economic Activity, Annual Average Rate of Growth. [Online; cited on June 28, 2008]. Available from URL:http://unstats.un.org/unsd/ snaama/selectionbasicFast.asp
White, H. A Heterosckedasticity-consistent Covariance Matrix and A Direct Test for Heteroskedasticity. Econometrica 48(1980): 817-838.
Wörz, J. Dynamic of Trade Specialization in Developed and Less Developed Countries. Emerging Markets Finance and Trade 41(3):92-22, 2005.
Venables, A.J. Geography and International Inequalities; The Impact of New Technology. Paper Prepared for ABCDE, World Bank, Washington DC, 2001.
Vollrath, T.L. A Theoretical Evaluation of Alternative Trade Intensity Measures of Revealed Comparative Advantage. Weltwirtschaftliches Archiv 127 (1991): 265-80.
Yi, K. Can Vertical Specialization Explain The Growth of World Trade? Journal of Political Economy 111(1):52-102, 2003.
Young, A. Learning by Doing and Dynamic Effects of International Trade. Quarterly Journal of Economics 106 (1991): 365-405.