Finance, Comparative Advantage, and Resource Allocation

The authors show that exported products exit the US market sooner if they violate the Heckscher-Ohlin notion of comparative advantage. Crucially, this pattern is stronger when exporting country has a well-developed banking system, measured by a hig...

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Main Authors:	Jaud, Melise, Kukenova, Madina, Strieborny, Martin
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ALLOCATION OF CAPITAL BANK CREDIT BANK CREDITS BANK LENDING BANKING SECTOR BANKING SYSTEM BANKRUPTCY BANKRUPTCY PROCEDURE BANKS BILATERAL TRADE BONDS BUSINESS CYCLE CAPITAL EXPENDITURES CAPITAL MARKET CAPITALIZATION CASH FLOW CHECKS COMMERCE COMPARATIVE ADVANTAGE COMPETITIVE PRODUCT COMPETITIVE PRODUCTS CORPORATE BONDS CORPORATE FINANCE CORPORATE GOVERNANCE CREDIT CONSTRAINTS DEBT DEBT SERVICE DEBT SERVICE PAYMENTS DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DOMESTIC BANK DOMESTIC BANKING DUMMY VARIABLE ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC REVIEW ECONOMIC STUDIES ECONOMIC SYSTEMS EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL RESULTS EMPLOYMENT EQUAL WEIGHTS EQUALIZATION EXPENDITURES EXPLANATORY VARIABLES EXPORT GROWTH EXPORT PERFORMANCE EXPORT SHARES EXPORTER EXPORTERS EXPORTS EXTERNAL DEBT FACTOR ENDOWMENTS FACTOR PRICE FACTOR PRICES FINANCIAL DEVELOPMENT FINANCIAL MARKETS FOREIGN COMPETITION FOREIGN MARKET FOREIGN MARKETS GDP GDP PER CAPITA GOVERNMENT INTERVENTION GOVERNMENT INTERVENTIONS GOVERNMENT SUBSIDIES GROWTH THEORY HIGH CORRELATION HUMAN CAPITAL INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVENTORY LEGAL SYSTEM LIQUIDITY LONG-TERM RESOURCE MARGINAL PRODUCTS MARKET IMPERFECTIONS MARKETING MEMBER COUNTRIES MINORITY INVESTORS NATIONAL BANK OF BELGIUM NEGATIVE IMPACT NEGATIVE SIGN 0 HYPOTHESIS POLICY DISCUSSIONS POLICY IMPLICATIONS POLICY RESEARCH POSITIVE IMPACT PRESENT VALUE PRIVATE CREDIT PRIVATE SECTOR PRODUCT MARKET PRODUCT MARKETS PUBLIC RELATIONS RATES OF RETURNS RESOURCE ALLOCATION SHAREHOLDERS SKEWED DISTRIBUTION STOCK MARKET STOCK MARKET CAPITALIZATION STOCK MARKETS SUBSTITUTE TOTAL FACTOR PRODUCTIVITY TRADE FLOWS TRADE LIBERALIZATION TRADING VALUE ADDED WAGES WORLD MARKET
Online Access:	http://documents.worldbank.org/curated/en/2012/06/16448089/finance-comparative-advantage-resource-allocation http://hdl.handle.net/10986/19930

id	okr-10986-19930
recordtype	oai_dc
spelling	okr-10986-199302021-04-23T14:03:52Z Finance, Comparative Advantage, and Resource Allocation Jaud, Melise Kukenova, Madina Strieborny, Martin ALLOCATION OF CAPITAL BANK CREDIT BANK CREDITS BANK LENDING BANKING SECTOR BANKING SYSTEM BANKRUPTCY BANKRUPTCY PROCEDURE BANKS BILATERAL TRADE BONDS BUSINESS CYCLE CAPITAL EXPENDITURES CAPITAL MARKET CAPITALIZATION CASH FLOW CHECKS COMMERCE COMPARATIVE ADVANTAGE COMPETITIVE PRODUCT COMPETITIVE PRODUCTS CORPORATE BONDS CORPORATE FINANCE CORPORATE GOVERNANCE CREDIT CONSTRAINTS DEBT DEBT SERVICE DEBT SERVICE PAYMENTS DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DOMESTIC BANK DOMESTIC BANKING DUMMY VARIABLE ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC REVIEW ECONOMIC STUDIES ECONOMIC SYSTEMS EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL RESULTS EMPLOYMENT EQUAL WEIGHTS EQUALIZATION EXPENDITURES EXPLANATORY VARIABLES EXPORT GROWTH EXPORT PERFORMANCE EXPORT SHARES EXPORTER EXPORTERS EXPORTS EXTERNAL DEBT FACTOR ENDOWMENTS FACTOR PRICE FACTOR PRICES FINANCIAL DEVELOPMENT FINANCIAL MARKETS FOREIGN COMPETITION FOREIGN MARKET FOREIGN MARKETS GDP GDP PER CAPITA GOVERNMENT INTERVENTION GOVERNMENT INTERVENTIONS GOVERNMENT SUBSIDIES GROWTH THEORY HIGH CORRELATION HUMAN CAPITAL INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVENTORY LEGAL SYSTEM LIQUIDITY LONG-TERM RESOURCE MARGINAL PRODUCTS MARKET IMPERFECTIONS MARKETING MEMBER COUNTRIES MINORITY INVESTORS NATIONAL BANK OF BELGIUM NEGATIVE IMPACT NEGATIVE SIGN 0 HYPOTHESIS POLICY DISCUSSIONS POLICY IMPLICATIONS POLICY RESEARCH POSITIVE IMPACT PRESENT VALUE PRIVATE CREDIT PRIVATE SECTOR PRODUCT MARKET PRODUCT MARKETS PUBLIC RELATIONS RATES OF RETURNS RESOURCE ALLOCATION SHAREHOLDERS SKEWED DISTRIBUTION STOCK MARKET STOCK MARKET CAPITALIZATION STOCK MARKETS SUBSTITUTE TOTAL FACTOR PRODUCTIVITY TRADE FLOWS TRADE LIBERALIZATION TRADING VALUE ADDED WAGES WORLD MARKET The authors show that exported products exit the US market sooner if they violate the Heckscher-Ohlin notion of comparative advantage. Crucially, this pattern is stronger when exporting country has a well-developed banking system, measured by a high ratio of bank credit over the GDP. Banks thus push firms away from exports that are facing an uphill battle on a competitive foreign market due to a suboptimal use of the domestic factor endowment. The results imply a disciplining role for bank credit in terminating inefficient trade flows. This constitutes a new channel through which finance improves resource allocation in the real economy. 2014-09-02T19:10:53Z 2014-09-02T19:10:53Z 2012-06 http://documents.worldbank.org/curated/en/2012/06/16448089/finance-comparative-advantage-resource-allocation http://hdl.handle.net/10986/19930 English en_US Policy Research Working Paper;No. 6111 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ALLOCATION OF CAPITAL BANK CREDIT BANK CREDITS BANK LENDING BANKING SECTOR BANKING SYSTEM BANKRUPTCY BANKRUPTCY PROCEDURE BANKS BILATERAL TRADE BONDS BUSINESS CYCLE CAPITAL EXPENDITURES CAPITAL MARKET CAPITALIZATION CASH FLOW CHECKS COMMERCE COMPARATIVE ADVANTAGE COMPETITIVE PRODUCT COMPETITIVE PRODUCTS CORPORATE BONDS CORPORATE FINANCE CORPORATE GOVERNANCE CREDIT CONSTRAINTS DEBT DEBT SERVICE DEBT SERVICE PAYMENTS DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DOMESTIC BANK DOMESTIC BANKING DUMMY VARIABLE ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC REVIEW ECONOMIC STUDIES ECONOMIC SYSTEMS EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL RESULTS EMPLOYMENT EQUAL WEIGHTS EQUALIZATION EXPENDITURES EXPLANATORY VARIABLES EXPORT GROWTH EXPORT PERFORMANCE EXPORT SHARES EXPORTER EXPORTERS EXPORTS EXTERNAL DEBT FACTOR ENDOWMENTS FACTOR PRICE FACTOR PRICES FINANCIAL DEVELOPMENT FINANCIAL MARKETS FOREIGN COMPETITION FOREIGN MARKET FOREIGN MARKETS GDP GDP PER CAPITA GOVERNMENT INTERVENTION GOVERNMENT INTERVENTIONS GOVERNMENT SUBSIDIES GROWTH THEORY HIGH CORRELATION HUMAN CAPITAL INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVENTORY LEGAL SYSTEM LIQUIDITY LONG-TERM RESOURCE MARGINAL PRODUCTS MARKET IMPERFECTIONS MARKETING MEMBER COUNTRIES MINORITY INVESTORS NATIONAL BANK OF BELGIUM NEGATIVE IMPACT NEGATIVE SIGN 0 HYPOTHESIS POLICY DISCUSSIONS POLICY IMPLICATIONS POLICY RESEARCH POSITIVE IMPACT PRESENT VALUE PRIVATE CREDIT PRIVATE SECTOR PRODUCT MARKET PRODUCT MARKETS PUBLIC RELATIONS RATES OF RETURNS RESOURCE ALLOCATION SHAREHOLDERS SKEWED DISTRIBUTION STOCK MARKET STOCK MARKET CAPITALIZATION STOCK MARKETS SUBSTITUTE TOTAL FACTOR PRODUCTIVITY TRADE FLOWS TRADE LIBERALIZATION TRADING VALUE ADDED WAGES WORLD MARKET
spellingShingle	ALLOCATION OF CAPITAL BANK CREDIT BANK CREDITS BANK LENDING BANKING SECTOR BANKING SYSTEM BANKRUPTCY BANKRUPTCY PROCEDURE BANKS BILATERAL TRADE BONDS BUSINESS CYCLE CAPITAL EXPENDITURES CAPITAL MARKET CAPITALIZATION CASH FLOW CHECKS COMMERCE COMPARATIVE ADVANTAGE COMPETITIVE PRODUCT COMPETITIVE PRODUCTS CORPORATE BONDS CORPORATE FINANCE CORPORATE GOVERNANCE CREDIT CONSTRAINTS DEBT DEBT SERVICE DEBT SERVICE PAYMENTS DEPENDENT VARIABLE DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DOMESTIC BANK DOMESTIC BANKING DUMMY VARIABLE ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC REVIEW ECONOMIC STUDIES ECONOMIC SYSTEMS EMPIRICAL ANALYSIS EMPIRICAL EVIDENCE EMPIRICAL RESULTS EMPLOYMENT EQUAL WEIGHTS EQUALIZATION EXPENDITURES EXPLANATORY VARIABLES EXPORT GROWTH EXPORT PERFORMANCE EXPORT SHARES EXPORTER EXPORTERS EXPORTS EXTERNAL DEBT FACTOR ENDOWMENTS FACTOR PRICE FACTOR PRICES FINANCIAL DEVELOPMENT FINANCIAL MARKETS FOREIGN COMPETITION FOREIGN MARKET FOREIGN MARKETS GDP GDP PER CAPITA GOVERNMENT INTERVENTION GOVERNMENT INTERVENTIONS GOVERNMENT SUBSIDIES GROWTH THEORY HIGH CORRELATION HUMAN CAPITAL INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVENTORY LEGAL SYSTEM LIQUIDITY LONG-TERM RESOURCE MARGINAL PRODUCTS MARKET IMPERFECTIONS MARKETING MEMBER COUNTRIES MINORITY INVESTORS NATIONAL BANK OF BELGIUM NEGATIVE IMPACT NEGATIVE SIGN 0 HYPOTHESIS POLICY DISCUSSIONS POLICY IMPLICATIONS POLICY RESEARCH POSITIVE IMPACT PRESENT VALUE PRIVATE CREDIT PRIVATE SECTOR PRODUCT MARKET PRODUCT MARKETS PUBLIC RELATIONS RATES OF RETURNS RESOURCE ALLOCATION SHAREHOLDERS SKEWED DISTRIBUTION STOCK MARKET STOCK MARKET CAPITALIZATION STOCK MARKETS SUBSTITUTE TOTAL FACTOR PRODUCTIVITY TRADE FLOWS TRADE LIBERALIZATION TRADING VALUE ADDED WAGES WORLD MARKET Jaud, Melise Kukenova, Madina Strieborny, Martin Finance, Comparative Advantage, and Resource Allocation
relation	Policy Research Working Paper;No. 6111
description	The authors show that exported products exit the US market sooner if they violate the Heckscher-Ohlin notion of comparative advantage. Crucially, this pattern is stronger when exporting country has a well-developed banking system, measured by a high ratio of bank credit over the GDP. Banks thus push firms away from exports that are facing an uphill battle on a competitive foreign market due to a suboptimal use of the domestic factor endowment. The results imply a disciplining role for bank credit in terminating inefficient trade flows. This constitutes a new channel through which finance improves resource allocation in the real economy.
format	Publications & Research :: Policy Research Working Paper
author	Jaud, Melise Kukenova, Madina Strieborny, Martin
author_facet	Jaud, Melise Kukenova, Madina Strieborny, Martin
author_sort	Jaud, Melise
title	Finance, Comparative Advantage, and Resource Allocation
title_short	Finance, Comparative Advantage, and Resource Allocation
title_full	Finance, Comparative Advantage, and Resource Allocation
title_fullStr	Finance, Comparative Advantage, and Resource Allocation
title_full_unstemmed	Finance, Comparative Advantage, and Resource Allocation
title_sort	finance, comparative advantage, and resource allocation
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2012/06/16448089/finance-comparative-advantage-resource-allocation http://hdl.handle.net/10986/19930
_version_	1764443929309085696

Finance, Comparative Advantage, and Resource Allocation

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