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The Ebb and Flow of Comparative Advantage: Trade and the Industrial Specialization of Canadian Manufacturing Regions, 1974 to 1999

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  • Brown, W. Mark

Abstract

Utilizing a longitudinal micro data file of manufacturing plants (1974 to 1999), this study tests the effect of higher levels of trade on the level of industrial specialization experienced by regional manufacturing economies. Consistent with trade driven by comparative advantage, the analysis demonstrates that higher levels of export intensity (exports as a share of output) across regions are associated with greater industrial specialization. However, the analysis also shows that changes in export intensity are only weakly associated with changes in specialization. This occurs because comparative advantage tends to shift away from industries that account for a large share of regional manufacturing employment and towards industries that initially have lower shares. This ebb and flow of comparative advantage helps to explain why Canadian manufacturing regions have not become more specialized in an environment of increasing integration into the world market.

Suggested Citation

  • Brown, W. Mark, 2007. "The Ebb and Flow of Comparative Advantage: Trade and the Industrial Specialization of Canadian Manufacturing Regions, 1974 to 1999," Economic Analysis (EA) Research Paper Series 2007044e, Statistics Canada, Analytical Studies Branch.
    • Handle: RePEc:stc:stcp5e:2007044e
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    File URL: http://www.statcan.gc.ca/bsolc/olc-cel/olc-cel?catno=11F0027M2007044&lang=eng
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    Cited by:

    1. John R. Baldwin & W. Mark Brown & Wulong Gu, 2012. "Geographic market access and the effects of trade on length of production run, product diversity and plant scale of Canadian manufacturing plants, 1974--1999," Journal of Economic Geography, Oxford University Press, vol. 12(2), pages 455-484, March.

    More about this item

    Keywords

    International trade; Manufacturing; Business performance and ownership; Business adaptation and adjustment; Regional and urban profiles;
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