Patterns of vertical specialisation in trade: long-run evidence for 91 countries

Pahl, S. & Timmer, M. P., Aug-2019, In : Review of world economics. 155, 3, p. 459-486 28 p.

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The authors estimate the domestic value-added content in exports of manufacturing goods (VAX-D ratio) for 91 countries over the period from 1970 to 2013. They find a strong decline in the world VAX-D ratio since the mid-1980s mostly accounted for by the substitution of foreign for domestic intermediates. Using a breakpoint detection method, they identify three waves of vertical specialisation in the world economy: 1970–1979, 1986–1995 and 1996–2008. The authors find that most countries (79) initiated a period of vertical specialisation at least once. They find strong evidence that the VAX-D ratio correlates negatively with GDP per capita, and that the negative slope is flattening out at higher levels of income.
Original languageEnglish
Pages (from-to)459-486
Number of pages28
JournalReview of world economics
Issue number3
Early online date30-May-2019
Publication statusPublished - Aug-2019


  • Vertical specialization, International Trade, Economic Development, STRUCTURAL-CHANGE, GROWTH, EXPORTS, PERFORMANCE

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