Three approaches that have been used empirically, each represented in this volume, are reviewed in this chapter to provide information about the patterns and causes of comparative advantage. Revealed comparative advantage, factor content of trade and the gravity model of trade each provide useful information, even if none of them is capable of fully delineating either the nature of comparative advantage or its causes. They can illuminate comparisons across countries that may be suggestive of directions for further research.

This chapter characterises broad trends in production, consumption and trade over the past thirty years across the OECD and selected emerging market (SEM) countries and sets them in the context of economic and social events pertinent to international commerce. It provides a background for the more nuanced analyses of trade specialisation and its underlying drivers that follow in the subsequent chapters of this volume.

This chapter elaborates on the concept of comparative advantage and its role in economic policy and discusses its measurement, in particular with reference to the Revealed Comparative Advantage (RCA) indices. It investigates cross-sector and crosscountry patterns and evolution of RCA indices for a group of 56 OECD and selected emerging economies (SEM) countries at a detailed level of product classification, covering trade in agricultural and manufactured products. In order to link export specialisation developments to some of the posited sources of comparative advantage, it classifies products according to their factor intensity which distinguishes between: primary, natural resource-intensive, unskilled labour-intensive, technology-intensive and human-capital intensive products.

This chapter is split into two parts. The first part focuses on monitoring recent trends in the trade of processed agricultural products and examines the leading exporting and importing countries of processed products. The second part examines which countries have a comparative advantage in exporting processed products and how these may have changed over time. Utilising information on comparative advantage and the methodology from Hausmann, Hwang and Rodrik (2007), the study assesses whether a country’s export basket matters in generating growth.

This chapter measures trade flows in terms of their factor content to determine if this approach still has relevance for understanding trade flows. It first discusses the Heckscher-Ohlin theory, given its focus on explaining trade in terms of a country’s relative factor content. The chapter goes on to briefly examine trends in relative endowments among OECD and selected emerging economies before turning to issues of measurement. Finally, an analysis of the United States and China factor content of trade, shows how the inclusion of intermediate imports affects relevant trade balances. The chapter concludes by offering some policy considerations.