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GTAP Resource #7207

"Anti-Granular Comparative Advantage"
by Ai, Jianwei, Haoran Li, Gary Lyn, Anton Yang and Wendong Zhang

There is growing evidence that a small set of large firms play a crucial role in international trade, shaping the origin countries’ comparative advantage, specialization and export patterns. Unlike this “granular comparative advantage” pattern found in previous studies, we find instead an anti-granular comparative advantage pattern holds generally for firms operating in a global manufacturing powerhouse, China. Breaking down by firm ownership-type reveals that this anti-granular comparative advantage pattern is largely driven by state-owned firms and Chinese-owned private firms. In contrast, we find that a strong granular comparative advantage pattern holds for foreign-owned firms. Building on this insight, we develop a multi-sector trade model with heterogeneous firm ownership type and employ a SSM-based estimation procedure to quantify the role of granular comparative advantage embodied in leading large foreign-owned firms in shaping fundamental comparative advantage across sectors. Finally, we quantify the welfare implications of increased privatization on the Chinese economy.

Resource Details (Export Citation) GTAP Keywords
Category: 2024 Conference Paper
Status: Not published
By/In: Presented during the 27th Annual Conference on Global Economic Analysis (Fort Collins, Colorado, USA)
Date: 2024
Created: Lyn, G. (4/12/2024)
Updated: Yang, A. (6/7/2024)
Visits: 121
- Bridging CGE and new quantitative trade (NQT) literature
- New quantitative trade models
- Advances in quantitative methods
- Model extension/development

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