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Financial Markets, the Pattern of Specialization and Comparative Advantage.” Chapter 2

By Helena Svaleryd, Jonas Vlachos, Torsten Persson and Daniel Waldenström


Due to underlying technological differences, industries differ in their need for external finance. Since services provided by the financial sector are largely immobile across countries, the pattern of specialization should be influenced by the degree of financial development. We find this effect to be strong. In fact, the financial sector has an even greater impact on the pattern of specialization among OECD countries than differences in human- and physical capital endowment. Further, it gives rise to comparative advantage in a way consistent with the Hecksher-Ohlin-Vanek model. Results on which aspects of financial systems that are of importance for specialization are also presented. JEL classification: F14; G20; O1

Topics: Financial intermediation, Financial systems, Specialization patterns, Comparative advantage a
Year: 2001
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