This document discusses emerging economies in global trade. It covers topics such as South-South trade between developing economies, international specialization patterns of countries, dynamics of specialization over time such as China's evolution, the phenomenon of hyper-specialization where countries specialize in a small number of products, and questions remaining around explaining hyper-specialization and its implications.
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Emerging Economies in Global Trade
1. LOGO
Econ 366
Group: Bryce Hollingsworth, Meiyi Cheng, Daniel Mena, James Hill
2. Emerging Economies in Global Trade
South-South Trade
International Specialization
Dynamics in Specialization
Hyper-specialized Exporters
Final Discussion
Econ 366
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3. South-South Trade
Urbanization and industrialization in China and India
Increased demand for raw materials
Developing economies are the supply sources
Growth has deepened global production networks
Increased cross-border flows
Econ 366
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4. South-South Trade
Exports from low-income countries to low- and
middle-income markets have risen dramatically
From 1994-2008, 24% to 42%, with China
and India accounting for half of this growth
Exports from middle-income countries to low- and
middle-income markets have also risen
From 33% to 46%, with China and India
accounting for two-fifths of this growth
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5. South-South Trade
Growth in South-South trade is a major part of the
recent global trade boom
Falling trade barriers and expanding global
production networks have contributed to Southern
trade growth
However, they are insufficient on their own to
explain why trade to GDP ratios have risen so much
in low- and middle-income countries
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6. International Specialization
9 non-oil exports in this paper
1. Agriculture and food products
2. Minerals and other raw materials
3. Footwear, apparel, and textiles
4. Metals
5. Chemicals
6. Machinery
7. Electronics
8. Transportation equipment
9. Other manufactures
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9. A closer look at China –
Dynamics of Specialization
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10. Hyper-Specialized Exporters
What we have seen
Country specialization by broad sector appears to
be consistent with standard models of
comparative advantage.
Over a period of time, specialization patterns
tend to evolve rapidly most likely due to factor
accumulation. (Ex. China)
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11. What is Hyper-specialization?
It involves breaking up a sector that is already being
specialized and going into more depth in each of the
new parts (PowerPoint example).
In their research, they found that low- and middle-
income countries have a fine degree of
specialization in a relatively small number of
products.
This specific type of hyper-specialization does not fit
standard trade models easily.
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14. Not just Low-income Countries
Specialization is not solely a function of having
small economies.
Middle income economies also hyper-specialize
(2008 Examples).
Exports of most countries are concentrated in a
small number of goods.
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15. What Explains Hyper-
Specialization in Exporting?
Melitz model(2003) that incorporates Heckscher-
Ohlin model? Not quite
Eaton and Kortum(2002) take on the Ricardian
model?
Rodik, Easterly, and Reshef(2009).
Ideal Model.
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16. Final Discussion
Middle-income nations are transforming the global
economy
Questions need to be answered:
How much of the recent growth in global trade
represents real value added?
What explains hyper-specialization in exporting?
Is China’s government pushing the country up the
product ladder?
What effect has the global commodity boom had on
living standards in low-income countries?
Econ 366
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