Editor Pick – Specialization and North-South Competition
Lionel Fontagné, Guillaume Gaulier, Soledad Zignago / CEPII
“On the basis of 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. 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.”
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