Skills and changing comparative advantage: The case of Japan

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Abstract

Is the skill gap of net exports widening? This question is nontrivial for many industrial countries because, with the rapid growth of emerging countries, human capital is considered one of the most important sources of comparative advantage. Theoretically, however, the answer is not necessarily obvious because of changing comparative advantage. This paper attempts to answer this question by extending the analysis of Wolff (2003) and by focusing on one of the largest OECD countries, Japan, for the period 1980-2005. The results indicate that the answer to the above question may well be "no." Although Japan is still a net exporter of skill-intensive goods, the skill gap of net exports has been narrowing since the mid-1990s, mainly as a result of the changes in the composition of trade. This implies that some OECD countries, including Japan, may have been losing their comparative advantage in skill-intensive goods in recent years.

Original languageEnglish
Pages (from-to)33-40
Number of pages8
JournalJapan and The World Economy
Volume28
DOIs
Publication statusPublished - 2013 Dec 1

Keywords

  • Comparative advantage
  • Factor content of trade
  • Japan
  • Skills

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations

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