TDPE presents: Arvind Panagariya

"Within- and Across-Product Specialization Revisited"Authors: Purba Mukerji and Arvind Panagariya In this paper, Mukerji and Panagariya revisit the issue of within- and across-product specialization. Unlike the recent work by Peter Schott, they show that across-product specialization remains pervasive. Schott’s analysis is exclusively based on US imports from its various trading partners. To fully get at the degree of within- versus across-product specialization in trade and whether within-product specialization and trade is differentiated by quality, one needs to consider data on both exports and imports, which Mukerji and Panagariya do. They find that less than 30 percent of all products the United States trades are subject to movements in both directions meaning they are exported as well as imported. As many as two-thirds of the products the United States imports do not appear in its export basket. Mukerji and Panagariya also calculate the standard Grubel-Lloyd index of intra-industry trade, and find that at HTS 10-digit level of classification, the value of this index fluctuates around 21 percent between 1989 and 2001. Thus, a disproportionately large volume of the United States trade exhibits across product specialization.Arvind Panagariya is Professor of Economics and Jagdish Bhagwati Professor of Indian Political Economy at Columbia University. He has made several fundamental contributions to international trade theory and policy. He is also an expert on the Indian Economy.