OECD Economics Department Working Papers
Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
- ISSN: 18151973 (online)
- https://doi.org/10.1787/18151973
New Evidence on the Determinants of Industrial Specialisation
Industrial specialization has important implications for economic performance; therefore, understanding its
determinants is of key policy relevance. This paper quantifies the relationship between factor endowments,
policies and institutions and patterns of industrial specialisation in production using a new cross-country
dataset compiled by WIOD that includes 37 OECD and non-OECD countries and 26 sectors. An advantage
of this database –as compared with those used by previous studies- is that makes it possible to look at
industrial specialization in terms of value added instead of gross exports, covering both services and
manufactures in a panel of advanced and developing economies. The empirical methodology is based on
the idea that industries vary in the conditions that they need for production, and countries differ in their
ability to provide for these industry-specific requirements. We find that not only cross-country differences
in factor endowments, such as capital and labour, but also differences in investment in R&D and policies
or institutions, such as financial development, tariffs and taxes, and product and labour market regulation,
can explain cross-country differences in industrial structure.
Keywords: intermediate input tariff, trade
JEL:
O57: Economic Development, Innovation, Technological Change, and Growth / Economywide Country Studies / Comparative Studies of Countries;
C23: Mathematical and Quantitative Methods / Single Equation Models; Single Variables / Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
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