Skill Dispersion and International Trade Patterns

There are a lot of studies on International trade, in which the aggregate factor endowments of a country and the effect on trade is investigated. Comparative advantage, whether driven by technology or aggregate factor endowments, is the key determinant of international trade. However, only a few empirical studies have investigated the distribution of these endowments and the influence on the trade pattern between countries. However, the distribution of factor endowments can be a source for comparative advantage as well. Thus, not only aggregate factor endowments make a difference in the determination of trade patterns, also the dispersion of these factors matters for trade. In this thesis the factor labor will be considered. The dispersion of skills in a country can raise incentives to trade. It is observed that countries can trade even if the technology in the two countries and the aggregated endowments are the same. In this study, the following hypothesis will be investigated: Countries with relatively greater skill dispersion will specialize in industries characterized by high-technology products and will eventually export these products. In order to do this, an empirical framework is set up. 17 different industries of 18 different countries are taken into account. The two most important variables, which are constructed for this study, are skill dispersion and the R&D intensity of export. The technology of a country is visible due to the variable R&D intensity of export. The R&D intensity of export will be regressed on skill dispersion. This study shows that a significantly positive influence of skill dispersion on the R&D intensity of export occurs, which supports the hypothesis that countries with relatively greater skill dispersion will export high-technology products