Limited access Past event
Department of Economics Seminar with Dr Lidia Smitkova, University of Oxford Structural Change in an Open Economy
Lidia works on topics related to trade, international macroeconomics and structural change.
Abstract: This paper investigates the role of trade and international borrowing in driving structural change. I decompose the change in manufacturing shares into three terms driven by (i) price- and income effects — standard drivers of structural change in a closed economy, (ii) Ricardian specialization subject to comparative advantage, and (iii) compositional effects due to international borrowing. Applying the decomposition to data from twenty economies between 1965 and 2011, I show that Ricardian specialization and international borrowing explain 23% and 17% of observed change in manufacturing shares, half of cross-country het- erogeneity in patterns of industrialization, half the dynamics in high-technology subsectors of manufacturing, and are indispensable for understanding the effect of China on global manufacturing and ‘miracle' industrialization in South Korea.