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The contribution of granular and fundamental comparative advantage to European Union countries' export specialisation

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  • Juan de Lucio
  • Raúl Mínguez
  • Asier Minondo
  • Francisco Requena

Abstract

This paper analyses the contribution of fundamental comparative advantage (a country‐specific component) and granular comparative advantage (a firm‐specific component) to European Union countries' export specialisation. We find that, on average, granular comparative advantage may explain export specialisation in 29% of industries, which account for 47% of total exports. We also show that 60% of the variation in export specialisation across countries and industries may be explained by granular comparative advantage. These results highlight that some outstanding firms may play a very important role in explaining European Union countries' export specialisation.

Suggested Citation

  • Juan de Lucio & Raúl Mínguez & Asier Minondo & Francisco Requena, 2020. "The contribution of granular and fundamental comparative advantage to European Union countries' export specialisation," The World Economy, Wiley Blackwell, vol. 43(11), pages 2983-3005, November.
    • Handle: RePEc:bla:worlde:v:43:y:2020:i:11:p:2983-3005
    DOI: 10.1111/twec.12989
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