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Specialization, fragmentation, and factor intensities: evidence from chilean plant-level data

Author

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  • Chul Chung
  • Alan V. Deardorff

    (Korea Institute for International Economic Policy, Korea
    University of Michigan, USA)

Abstract

We examine the effects of trade liberalization on structural changes at the plant-level and industry-level. The traditional Heckscher-Ohlin (H-O) model predicts an increase in capital-labor ratios in a labor abundant country after trade liberalization. This is in marked contrast to the implications of an otherwise similar model in which trade is the result of costly fragmentation, which predicts a declining pattern of capital-labor ratios following trade liberalization. Empirical results from Chilean plant-level data and industry-level data are rather consistent with fragmentation, which seems to require structural changes caused by trade liberalization.

Suggested Citation

  • Chul Chung & Alan V. Deardorff, 2008. "Specialization, fragmentation, and factor intensities: evidence from chilean plant-level data," Journal of Developing Areas, Tennessee State University, College of Business, vol. 41(2), pages 91-109, January-M.
    • Handle: RePEc:jda:journl:vol.41:year:2008:issue2:pp:91-109
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    More about this item

    Keywords

    Fragmentation; Factor Intensity; Heckscher-Ohlin; Trade liberalization; Chile;
    All these keywords.

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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