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Power laws and comparative advantage
- DOI:
- 10.1080/00036846.2010.543079
pages 1483-1507
- Published online: 04 Mar 2011
Abstract
Using a comprehensive international trade data set we document empirical Power Laws (PLs) for the distribution of the interaction between countries as measured by revealed comparative advantage. Using the recently developed estimator by Gabaix and Ibragimov (2011), we find strong evidence in favour of PLs along the time, country and sector dimension for three different levels of data aggregation. This finding is not predicted by any of the existing trade theories. The estimated PL exponents characterizing the distribution of revealed comparative advantage are stable over time but differ between countries and sectors. These differences are related empirically to country and sector characteristics, including population size, Gross Domestic Product (GDP) and factor intensities.
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- Citation information:
- Published online: 04 Mar 2011
Author affiliations
- a Faculty of Economics and Business, Amsterdam School of Economics , University of Amsterdam , Roetersstraat 11, WB 1018, The Netherlands
- b Department of Economics , Utrecht University , Janskerkhof 12, Utrecht 3512 BL, The Netherlands
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