Abstract
In this paper we investigate the economic integration - industrial specialization nexus and unravel the relationship between trade and financial openness and industrial specialization. For a panel of 31 countries over the period 1970 to 2005, we find that trade integration relates negatively to specialization, while financial integration relates positively to specialization. Furthermore, the relationship between trade (financial) integration and specialization is further deep- ened by the level of financial (trade) integration. Lastly, trade integration has a stronger connection to industrial special- ization in countries with a high degree of intra-industry trade, whereas financial integration has a stronger connection to specialization in countries with a relatively underdeveloped financial system. Our findings are robust to various measures and alternative model specifications.
| Original language | English |
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| Publisher | Meteor Research Memorandum |
| Volume | RM/13/03 |
| Publication status | Published - 2013 |
| Externally published | Yes |