Working Paper No. 64
By James Proudman and Stephen Redding
The theoretical literature on endogenous growth and international trade suggests that comparative advantage is endogenous. Sector-specific learning by doing and technology transfer respectively provide reasons why initial patterns of international specialisation may persist or exhibit mobility over time. This paper evaluates the extent of persistence or mobility in trade in manufactured goods in the United Kingdom and Germany for the period 1970-93. A measure of the extent of specialisation is presented and its evolution over time modelled as a sequence of cross-section distributions. Evidence of considerable mobility is found, with the degree of mobility in the United Kingdom exceeding that in Germany.