Specialization alters the incidence of trade costs to buyers and sellers, with pro-and
anti-globalizing effects on 76 countries from 1990-2002. The structural gravity model
yields measures of Constructed Home Bias and the Total Factor Productivity effect of
changing incidence. A bit more than half the world's countries experience declining
constructed home bias and rising real output while the remainder of countries experi-
ence rising home bias and falling real output. The effects are big for the outliers. A
novel test of the structural gravity model restrictions shows it comes very close in an
economic sense
