| Abstract: |
In this paper, I examine changes in international trade associated with the
integration of low- and middle-income countries into the global economy. Led
by China and India, the share of developing economies in global exports more
than doubled between 1994 and 2008. One feature of new trade patterns is
greater South-South trade. China and India have booming demand for imported
raw materials, which they use to build cities and factories. Industrialization
throughout the South has deepened global production networks, contributing to
greater trade in intermediate inputs. A second feature of new trade patterns
is the return of comparative advantage as a driver of global commerce. Growth
in low- and middle-income nations makes specialization according to
comparative advantage more important for the global composition of trade, as
North-South and South-South commerce overtakes North-North flows. China’s
export specialization evolves rapidly over time, revealing a capacity to speed
up product ladders. Most developing countries hyper-specialize in handful of
export products. The emergence of low- and middle-income countries in trade
reveals significant gaps in knowledge about the deep empirical determinants of
export specialization, the dynamics of specialization patterns, and why
South-South and North-North trade differ. |