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Muhammed A Yildirim - One of the best experts on this subject based on the ideXlab platform.
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implied Comparative Advantage
Research Policy, 2021Co-Authors: Ricardo Hausmann, Daniel P Stock, Muhammed A YildirimAbstract:Abstract The Comparative Advantage of a location shapes its industrial structure. Current theoretical models based on this principle do not take a stance on how Comparative Advantages in different industries or locations are related with each other, or what such patterns of relatedness might imply about the evolution of Comparative Advantage. We build a simple Ricardian-inspired model and show that hidden information on inter-industry and inter-location relatedness can be captured by simple correlations between the observed structure of industries across locations, or the structure of locations across industries. We then use this recovered information to calculate a measure of implied Comparative Advantage, and show that it explains much of the location’s current industrial structure. We give evidence that these patterns are present in a wide variety of contexts, namely the export of goods (internationally) and the employment, payroll and number of establishments across the industries of subnational regions (in the US, Chile and India). In each of these cases, the deviations between the observed and implied Comparative Advantage in the past tend to be highly predictive of future industry growth, especially at horizons of a decade or more; this explanatory power holds at both the intensive as well as the extensive margin. These results suggest that a component of the long-term evolution of Comparative Advantage is already implied in today’s patterns of production.
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Implied Comparative Advantage
SSRN Electronic Journal, 2014Co-Authors: Ricardo Hausmann, Daniel P Stock, César A. Hidalgo, Muhammed A YildirimAbstract:Ricardian theories of production often take the Comparative Advantage of locations in diff erent industries to be uncorrelated. They are seen as the outcome of the realization of a random extreme value distribution. These theories do not take a stance regarding the counterfactual or implied Comparative Advantage if the country does not make the product. Here, we fi nd that industries in countries and cities tend to have a relative size that is systematically correlated with that of other industries. Industries also tend to have a relative size that is systematically correlated with the size of the industry in similar countries and cities. We illustrate this using export data for a large set of countries and for city-level data for the US, Chile and India. These stylized facts can be rationalized using a Ricardian framework where Comparative Advantage is correlated across technologically related industries. More interestingly, the deviations between actual industry intensity and the implied intensity obtained from that of related industries or related locations tend to be highly predictive of future industry growth, especially at horizons of a decade or more. This result holds both at the intensive as well as the extensive margin, indicating that future Comparative Advantage is already implied in today's pattern of production.
Ricardo Hausmann - One of the best experts on this subject based on the ideXlab platform.
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implied Comparative Advantage
Research Policy, 2021Co-Authors: Ricardo Hausmann, Daniel P Stock, Muhammed A YildirimAbstract:Abstract The Comparative Advantage of a location shapes its industrial structure. Current theoretical models based on this principle do not take a stance on how Comparative Advantages in different industries or locations are related with each other, or what such patterns of relatedness might imply about the evolution of Comparative Advantage. We build a simple Ricardian-inspired model and show that hidden information on inter-industry and inter-location relatedness can be captured by simple correlations between the observed structure of industries across locations, or the structure of locations across industries. We then use this recovered information to calculate a measure of implied Comparative Advantage, and show that it explains much of the location’s current industrial structure. We give evidence that these patterns are present in a wide variety of contexts, namely the export of goods (internationally) and the employment, payroll and number of establishments across the industries of subnational regions (in the US, Chile and India). In each of these cases, the deviations between the observed and implied Comparative Advantage in the past tend to be highly predictive of future industry growth, especially at horizons of a decade or more; this explanatory power holds at both the intensive as well as the extensive margin. These results suggest that a component of the long-term evolution of Comparative Advantage is already implied in today’s patterns of production.
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Implied Comparative Advantage
SSRN Electronic Journal, 2014Co-Authors: Ricardo Hausmann, Daniel P Stock, César A. Hidalgo, Muhammed A YildirimAbstract:Ricardian theories of production often take the Comparative Advantage of locations in diff erent industries to be uncorrelated. They are seen as the outcome of the realization of a random extreme value distribution. These theories do not take a stance regarding the counterfactual or implied Comparative Advantage if the country does not make the product. Here, we fi nd that industries in countries and cities tend to have a relative size that is systematically correlated with that of other industries. Industries also tend to have a relative size that is systematically correlated with the size of the industry in similar countries and cities. We illustrate this using export data for a large set of countries and for city-level data for the US, Chile and India. These stylized facts can be rationalized using a Ricardian framework where Comparative Advantage is correlated across technologically related industries. More interestingly, the deviations between actual industry intensity and the implied intensity obtained from that of related industries or related locations tend to be highly predictive of future industry growth, especially at horizons of a decade or more. This result holds both at the intensive as well as the extensive margin, indicating that future Comparative Advantage is already implied in today's pattern of production.
Jörg L. Spenkuch - One of the best experts on this subject based on the ideXlab platform.
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self selection and Comparative Advantage in social interactions
Journal of the European Economic Association, 2018Co-Authors: Steve Cicala, Roland G. Fryer, Jörg L. SpenkuchAbstract:We propose a theory of social interactions based on self-selection and Comparative Advantage. In our model, students choose peer groups based on their Comparative Advantage within a social environment. The effect of moving a student into a different environment with higher-achieving peers depends on where in the ability distribution she falls and the shadow prices that clear the social market. We show that the model’s key prediction—an individual’s ordinal rank predicts her behavior and test scores—is borne out in one randomized controlled trial in Kenya as well as administrative data from the United States. To test whether our selection mechanism can explain the effect of rank on outcomes, we conduct an experiment with nearly 600 public school students in Houston. The experimental results suggest that social interactions are mediated by self-selection based on Comparative Advantage.
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Comparative Advantage in Social Interactions
SSRN Electronic Journal, 2011Co-Authors: Steve Cicala, Roland G. Fryer, Jörg L. SpenkuchAbstract:We propose a model of social interactions based on Comparative Advantage. When Comparative Advantage is the guiding principle of social interactions, the eect of moving a student into an environment with higher-achieving peers depends on where in the ability distribution she falls and the shadow prices that clear the social market. We show that the model's key prediction|an individual's ordinal rank predicts her behavior and test scores, ceteris paribus|is borne out in one randomized controlled trial in Kenya as well as two large observational data sets from the U.S. To test whether Comparative Advantage can explain the eect of rank on outcomes, we conduct an experiment with nearly 600 public school students in Houston. The experimental results suggest that social interactions are, at least in part, governed by Comparative Advantage.
Macleans Mzumara - One of the best experts on this subject based on the ideXlab platform.
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Inter-Industry Comparative Advantage of Sudan
Review of Economics and Development Studies, 2015Co-Authors: Macleans MzumaraAbstract:The Author has investigated inter-industry Comparative Advantage of Sudan. Inter-industry Comparative Advantage in Sudan is lacking. Industries have insignificant number of product codes in which they have Comparative Advantage. Exports earnings are not linked to the number of product codes in which Comparative Advantage exists. Sudan mainly exports crude oil without value addition. It is recommended that Sudan diversifies its economy. It is further recommended that it adds value to its oil by refining it. There is a need of investing in exploration of new endowments to boost Comparative Advantage. Sudan should work towards attracting foreign direct investment so it can be able to expand its narrow base of Comparative Advantage
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Mozambique's Inter-Industry Comparative Advantage
2014Co-Authors: David Damiyano, Macleans Mzumara, Lovemore MuchingamiAbstract:The authors investigated inter-industry Comparative Advantage in Mozambique. In Mozambique, industries lack Comparative Advantage. However, in comparison between industries (inter-industry), machinery/electric tops in Mozambique followed by vegetable product industry. Foot wear/head gear demonstrates lack of Comparative Advantage and it is followed by plastic/rubber industry. In general, Industries in Mozambique show lack of Comparative Advantage. It is recommended that Mozambique should enact policies that encourage foreign direct investment (FDI). It is further recommended that Mozambique should be investing in exploring undiscovered endowment which when discovered can boost Comparative Advantage. Mozambique should consider accepting these results and come up with a concrete industrial policy which can improve export capabilities of Mozambique’s industries on the international market.
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Does Mercosur Possess Comparative Advantage
Journal of Economics, 2014Co-Authors: Anna Chingarande, Macleans Mzumara, Roseline T KarambakuwaAbstract:The researchers investigated Comparative Advantage in MERCOSUR. The main objective was to find out whether MERCOSUR member states possess Comparative Advantage. Balassa's Revealed Comparative Advantage (RCA) technique was applied. Brazil was found to have Comparative Advantage in 674 product lines, Argentina in 518 product lines, Paraguay in 485 product lines, Uruguay 312 product lines and Venezuela in 83 product lines. The researchers concluded that MERCOSUR indeed has Comparative Advantage although the number of products in which it has Comparative Advantage is very limited. They therefore recommended that MERCOSUR should consider admitting more members in order to improve the number of the products in which Comparative Advantage may be revealed.
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An Analysis of Inter-Sectoral Comparative Advantage of Seychelles
Greener Journal of Business and Management Studies, 2013Co-Authors: Victoria Mudavanhu, Macleans Mzumara, Felex TafireiAbstract:The authors investigated inter-sectoral Comparative Advantage of Seychelles. The sector with the highest inter-sectoral Comparative Advantage is the Animal and animal products sector followed by the miscellaneous sector. Least is the raw hides, skins, leather and furs sector with no Comparative Advantage at all. The products that dominate the animal and animal products sector are various types of fish or sea products. However, the top two sectors do have very few products which have demonstrated to have Comparative Advantage. In general, inter-sectoral Comparative Advantage in Seychelles is very limited. It is recommended that Seychelles should come up with sectoral strategies to boost Comparative Advantage. There is a need to diversify from fish products to include other products. Seychelles should also encourage inward foreign direct investment specifically from multi-national firms which can bring in technology and improve on Comparative Advantage.
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An Investigation of Sectoral Comparative Advantage of Botswana
Greener Journal of Economics and Accountancy, 2013Co-Authors: Anna Chingarande, Macleans Mzumara, Bindura Bag, Roseline T KarambakuwaAbstract:The paper investigated sectoral Comparative Advantage of Botswana. Machinery/electric sector tops inter-sectoral Comparative Advantage in Botswana. It is followed by the textiles sector. The least in terms of Comparative Advantage is foot wear/head gear sector then followed by raw hides, skins leather and furs sector. The sector which tops in Botswana in Comparative Advantage, is not necessarily the one that tops in export value. Diamonds which dominate Botswana’s exports fall in the stone/glass sector and the sector possess less Comparative Advantage than other sectors ahead of it. It is recommended that Botswana should be promoting other products also other than diamonds in the international markets. That Botswana enacts a focused export promotion strategy on sectors which possess Comparative Advantage. Botswana should continue providing enabling environment that can lead to inflow of foreign direct investment through transnational corporations with technology that can improve sectoral Comparative Advantage.
Daniel P Stock - One of the best experts on this subject based on the ideXlab platform.
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implied Comparative Advantage
Research Policy, 2021Co-Authors: Ricardo Hausmann, Daniel P Stock, Muhammed A YildirimAbstract:Abstract The Comparative Advantage of a location shapes its industrial structure. Current theoretical models based on this principle do not take a stance on how Comparative Advantages in different industries or locations are related with each other, or what such patterns of relatedness might imply about the evolution of Comparative Advantage. We build a simple Ricardian-inspired model and show that hidden information on inter-industry and inter-location relatedness can be captured by simple correlations between the observed structure of industries across locations, or the structure of locations across industries. We then use this recovered information to calculate a measure of implied Comparative Advantage, and show that it explains much of the location’s current industrial structure. We give evidence that these patterns are present in a wide variety of contexts, namely the export of goods (internationally) and the employment, payroll and number of establishments across the industries of subnational regions (in the US, Chile and India). In each of these cases, the deviations between the observed and implied Comparative Advantage in the past tend to be highly predictive of future industry growth, especially at horizons of a decade or more; this explanatory power holds at both the intensive as well as the extensive margin. These results suggest that a component of the long-term evolution of Comparative Advantage is already implied in today’s patterns of production.
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Implied Comparative Advantage
SSRN Electronic Journal, 2014Co-Authors: Ricardo Hausmann, Daniel P Stock, César A. Hidalgo, Muhammed A YildirimAbstract:Ricardian theories of production often take the Comparative Advantage of locations in diff erent industries to be uncorrelated. They are seen as the outcome of the realization of a random extreme value distribution. These theories do not take a stance regarding the counterfactual or implied Comparative Advantage if the country does not make the product. Here, we fi nd that industries in countries and cities tend to have a relative size that is systematically correlated with that of other industries. Industries also tend to have a relative size that is systematically correlated with the size of the industry in similar countries and cities. We illustrate this using export data for a large set of countries and for city-level data for the US, Chile and India. These stylized facts can be rationalized using a Ricardian framework where Comparative Advantage is correlated across technologically related industries. More interestingly, the deviations between actual industry intensity and the implied intensity obtained from that of related industries or related locations tend to be highly predictive of future industry growth, especially at horizons of a decade or more. This result holds both at the intensive as well as the extensive margin, indicating that future Comparative Advantage is already implied in today's pattern of production.