Task Trade between Similar Countries
The authors propose a theory of task trade between countries that have similar relative factor endowments and technological capabilities but may differ in size. Firms produce differentiated goods by performing a continuum of tasks, each of which ge...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110928160539 http://hdl.handle.net/10986/3582 |
| Summary: | The authors propose a theory of task
trade between countries that have similar relative factor
endowments and technological capabilities but may differ in
size. Firms produce differentiated goods by performing a
continuum of tasks, each of which generates local
spillovers. Tasks can be performed at home or abroad, but
offshoring entails costs that vary by task. In equilibrium,
the tasks with the highest offshoring costs may not be
traded. Among the remainder, those with the relatively
higher offshoring costs are performed in the country that
has the higher wage and higher aggregate output. The paper
discusses the relationship between equilibrium wages,
equilibrium outputs, and relative country size and examines
how the pattern of specialization reflects the key
parameters of the model. |
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