Criss-Crossing Globalization : Uphill Flows of Skill-Intensive Goods and Foreign Direct Investment

This paper documents an unusual and possibly significant phenomenon: the export of skills, embodied in goods, services or capital from poorer to richer countries. The authors first present a set of stylized facts. Then, using a measure that combines the sophistication of a country s exports with the average income level of destination countries, they show that the performance of a number of developing countries - notably China, Mexico and South Africa - matches that of much more advanced countries - such as Japan, Spain and the United States. The authors create a new combined dataset on foreign direct investment (covering greenfield investment as well as mergers and acquisitions). The analysis shows that flows of foreign direct investment to developed countries from developing countries - like Brazil, India, Malaysia and South Africa - as a share of their GDP, are as large as flows from developed countries - like Japan, Korea and the United States. The authors suggest that it is not just the composition of exports but their destination that matters. In both cross-sectional and panel regressions, with a range of controls, a measure of uphill flows of sophisticated goods is significantly associated with better growth performance. These results suggest the need for a deeper analysis of whether the benefits of development might derive not from deifying comparative advantage but from defying it.

Bibliographic Details

Main Authors:	Mattoo, Aaditya, Subramanian, Arvind
Language:	English
Published:	2009-09-01
Subjects:	ADVANCED COUNTRIES, AFFILIATED ORGANIZATIONS, APARTHEID, BALANCE OF PAYMENTS, BANK POLICY, BENEFITS OF TRADE, CAPITAL STOCK, COMPARATIVE ADVANTAGE, COMPETITIVENESS, COUNTRY FIXED EFFECTS, COUNTRY TO COUNTRIES, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT ECONOMICS, DISCLOSURE, DISCLOSURE REQUIREMENTS, DOMESTIC PRODUCERS, ECONOMIC INTEGRATION, ECONOMIC PERFORMANCE, ECONOMIES OF SCALE, EMERGING MARKET, EMERGING MARKET COUNTRIES, EMERGING MARKETS, EMERGING MULTINATIONALS, EQUILIBRIUM, EXPORT BASKET, EXPORT FLOWS, EXPORT PRODUCTION, EXPORTERS, EXPORTS, FINANCIAL FLOWS, FIXED COSTS, FLOWS OF CAPITAL, FOREIGN CAPITAL, FOREIGN DIRECT INVESTMENT, FOREIGN FIRMS, FOREIGN MARKETS, FOREIGN PRODUCERS, FOREIGN TRADE, GDP, GDP PER CAPITA, GLOBALIZATION, GROWTH THEORIES, HUMAN CAPITAL, IMPERFECT COMPETITION, IMPORTS, INCOME, INCOME LEVEL, INDUSTRIAL COUNTRIES, INSTRUMENT, INTERNATIONAL BANK, INTERNATIONAL ECONOMICS, INTERNATIONAL TRADE, INVESTING, INVESTMENT PROJECTS, LOW INTEREST RATES, MARKET STRUCTURE, MERGERS, MICRO DATA, OFFSHORE FINANCIAL CENTERS, PER CAPITA INCOME, PER CAPITA INCOMES, PRODUCT DIFFERENTIATION, PRODUCTIVITY, RETURNS, RULE OF LAW, SAVINGS, STOCKS, TECHNOLOGY TRANSFER, TRADE DATA, TRADE MODELS, TRADING, TRANSACTION, TRUST FUND, VIRTUOUS CYCLE, WAGES, WORLD INVESTMENT REPORT, WORLD TRADE,
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_20090910134156 https://hdl.handle.net/10986/4239
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