TY - UNPB

T1 - The gains from the division of labour and comparative advantage

AU - Soo, Kwok Tong

PY - 2013/6

Y1 - 2013/6

N2 - This paper develops a model of international trade based on comparativeadvantage and the division of labour. Comparative advantage in intermediategoods determines the extent of the division of labour, while the division of labourand comparative advantage in final goods lead to gains from trade. Labour is usedto produce traded intermediate inputs which are used in the production of tradedfinal goods; therefore trade is both inter- and intra-industry in nature. Largecountries export a smaller share of final goods and a larger share of intermediategoods than small countries. These predictions find supportive evidence in the data.

AB - This paper develops a model of international trade based on comparativeadvantage and the division of labour. Comparative advantage in intermediategoods determines the extent of the division of labour, while the division of labourand comparative advantage in final goods lead to gains from trade. Labour is usedto produce traded intermediate inputs which are used in the production of tradedfinal goods; therefore trade is both inter- and intra-industry in nature. Largecountries export a smaller share of final goods and a larger share of intermediategoods than small countries. These predictions find supportive evidence in the data.

KW - Division of labour

KW - Comparative advantage

KW - Gains from trade

M3 - Working paper

T3 - Economics Working Paper Series

BT - The gains from the division of labour and comparative advantage

PB - Lancaster University, Department of Economics

CY - Lancaster

ER -