|
| |
N° 2007-06 |
  |
| May 2007 |
| Specialisation across Varieties within Products
and North-South Competition |
Lionel Fontagné
Guillaume Gaulier
Soledad Zignago |
See
BACI
home page |
Recent developments in trade theory and related empirical studies have drawn a revised
picture of trade patterns that is refreshing our understanding of North-South competition:
international specialisation has been proved to take place within products, across varieties,
rather than across products or across industries. On average, Japanese unit values
(values/quantities) for instance are 1.4 times higher than for Brazil, 1.9 times higher than
for India, and 2.9 times higher than for China, for the same products, shipped to the same
markets, within the same year (2004). Systematising this repeated empirical evidence, we
ask here what are the precise patterns regarding the specialisation of countries within
products and across varieties and what are the determinants of such specialisation. Better
understanding such trade patterns helps to clarify the challenges for policy posed by the
emergence of competitors in the South, covering the whole range of traded products.
Our value added is twofold. Firstly, we use BACI, the new CEPII data base of world trade
covering the largest available set of countries over a decade at the most detailed level of the
product classification. BACI reconciles the declarations of trading partners to the United
Nations (COMTRADE), extracting trade costs from unit values of imports, and correcting
for the quality of the declarations. We consider varieties of products inside each heading of
the 6-digit level of the harmonised nomenclature, which comprises some 5,000 products.
Secondly, we take advantage of this extensive coverage to systematically address the
determinants of specialisation using a 10 year panel of 163 countries and 25 manufactured
sectors. The latter exercise, thanks to the presence of developed and developing importers
in the data set, enables us to separately identify the role of quality in North-North, North-South, South-North and South-South trade relationships.
Our results point to four stylised facts. Firstly, the similarity of exports between North and
South is much more limited when we consider differentiated varieties than when industries
are considered. Secondly, and this generalises Schott’s (2004) findings , the unit value
(value divided by quantity) of exported products to a certain market varies with the level of
development of the exporter. Thirdly, and according to the role played by traditional
determinants of specialisation now operating across varieties, the observed redistribution of
market shares at the world level has been especially detrimental to advanced economies for
low unit value varieties, while the EU has better resisted competition in high unit value
varieties, in particular in consumer goods. Fourthly, we use a gravity equation controlling
for the supply and demand side determinants considered in the literature to explain the
bilateral trade in varieties among developing and developed economies.
On the basis of such detailed and systematic empirical evidence regarding the specialisation
of countries within – rather than between – products, we ask whether the fears raised by
North-South competition are exaggerated. China may be exporting under quite as much
product headings as Germany, but at the most detailed level of the international
classification of products, varieties exported by Germany and China are not in direct
competition since their prices are too different. And if workers in the North and the South
hardly compete on the same varieties, the link between trade and factor prices is somehow
weakened. Our analysis confirms that advanced economies are keeping an advantage, or are
suffering a lesser disadvantage, in the upper market segment. The bottom line of this
reasoning is that North and South are not competing head on within industries; However
such a conclusion should not hide the plausible domestic impacts of a systematic
repositioning on up market varieties by advanced economies. |
Non-technical summary |
|
Résumé
non-technique
en français  |
|
Full text
|
| |
|
| Product Trade; Export Unit Values, Vertical Differentiation |
Keywords |
| F1, F4 |
JEL classification |
| |
|
| To visualise the full text document, use Acrobat
Reader |
|
|
|
|
