EVOLVING PATTERNS OF INTERNATIONAL TRADE

James Proudman

Bank of England

and

Stephen Redding

New College, Oxford and CEPR

 

March 1998

 

Abstract

Theoretical models of growth and trade suggest that patterns of international specialisation are inherently dynamic and evolve endogenously over time. Initial comparative advantages are either reinforced or gradually unwound with the passage of time. This paper puts forward an empirical framework to evaluate the dynamics of international trade patterns, that uses techniques widely employed in the cross-country literature on income convergence. Applying this framework to industry--level data, we find evidence or significant differences in international trade dynamics among the G5 economies.