Specialization, Capital Accummulation, and Development

DOIREANN FITZGERALD; JUAN CARLOS HALLAK

Journal of International Economics

North-Holland

Año: 2004 vol. 64 p. 277 - 302

0022-1996

We estimate the e¤ect of factor proportions on the pattern of manufacturing specialization in a cross-section of OECD countries, taking into account that factor accumulation responds to productivity. We show that the failure to control for productivity di¤erences produces biased estimates. Our model explains 2/3 of the observed di¤erences in the pattern of specialization between the poorest and richest OECD countries. However, because factor proportions and the pattern of specialization co-move in the development process, their strong empirical relationship is not su¢ cient to determine whether specialization is driven by factor proportions, or by other mechanisms also correlated with level of development.