Understanding Global Trade

Understanding Global Trade

Elhanan Helpman

This draft: August 25, 2010 c ° Elhanan Helpman

Contents

1 Introduction

1

2 Comparative Advantage

15

2.1

Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20

2.2

Factor Proportions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

37

3 Gainers and Losers

63

3.1

No Distributional Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . .

66

3.2

Two Case Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

71

3.2.1

The U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

71

3.2.2

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

73

3.3

Distributional Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

77

3.4

Compensating Losers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

85

4 Scale and Scope

93 v vi

CONTENTS
4.1

Economies of Scale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.2

Monopolistic Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

4.3

Additional Sources of Gains from Trade . . . . . . . . . . . . . . . . . . . . 127

5 Across Firms Within Industries

98

133

5.1

Exporting versus Nonexporting Firms . . . . . . . . . . . . . . . . . . . . . 134

5.2

Quantitative Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

5.3

Unemployment and Inequality . . . . . . . . . . . . . . . . . . . . . . . . . . 150

6 Offshoring and Outsourcing

169

6.1

Offshoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173

6.2

The Traditional Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177

6.3

Horizontal FDI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180

6.4

Vertical FDI . . . . . . .

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