Stages of diversification in a neoclassical world

Catia Batista, Jacques Potin

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)


Recent research has documented a U-shaped industrial concentration curve over an economy's development path. How far can neoclassical trade theory take us in explaining this pattern? We estimate the production side of the Heckscher-Ohlin model using industry data on 44 developed and developing countries for the period 1976-2000. Decomposing the implied changes in industrial concentration over time shows that at least one third of these changes seems to be explained by a Rybczynski effect. This result suggests that capital accumulation led poor countries to diversify their industrial production, while rich countries made their production more concentrated in highly capital-intensive industries.

Original languageEnglish
Pages (from-to)276-284
Number of pages9
JournalEconomics Letters
Issue number2
Publication statusPublished - 1 Feb 2014


  • Diversification
  • Economic growth and International trade
  • Heckscher-Ohlin
  • Industrial concentration
  • Specialization
  • Structural change


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