This document discusses emerging economies in global trade. It covers topics such as South-South trade between developing economies, international specialization patterns of countries, dynamics of specialization over time such as China's evolution, the phenomenon of hyper-specialization where countries specialize in a small number of products, and questions remaining around explaining hyper-specialization and its implications.

1. LOGO
Econ 366
Group: Bryce Hollingsworth, Meiyi Cheng, Daniel Mena, James Hill

2. Emerging Economies in Global Trade
 South-South Trade
 International Specialization
 Dynamics in Specialization
 Hyper-specialized Exporters
 Final Discussion
Econ 366
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3. South-South Trade
 Urbanization and industrialization in China and India
 Increased demand for raw materials
 Developing economies are the supply sources
 Growth has deepened global production networks
 Increased cross-border flows
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4. South-South Trade
 Exports from low-income countries to low- and
middle-income markets have risen dramatically
 From 1994-2008, 24% to 42%, with China
and India accounting for half of this growth
 Exports from middle-income countries to low- and
middle-income markets have also risen
 From 33% to 46%, with China and India
accounting for two-fifths of this growth
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5. South-South Trade
 Growth in South-South trade is a major part of the
recent global trade boom
Falling trade barriers and expanding global
production networks have contributed to Southern
trade growth
 However, they are insufficient on their own to
explain why trade to GDP ratios have risen so much
in low- and middle-income countries
Econ 366
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6. International Specialization
 9 non-oil exports in this paper
1. Agriculture and food products
2. Minerals and other raw materials
3. Footwear, apparel, and textiles
4. Metals
5. Chemicals
6. Machinery
7. Electronics
8. Transportation equipment
9. Other manufactures
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7. International Specialization
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8. International Specialization
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9. A closer look at China –
Dynamics of Specialization
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10. Hyper-Specialized Exporters
 What we have seen
 Country specialization by broad sector appears to
be consistent with standard models of
comparative advantage.
 Over a period of time, specialization patterns
tend to evolve rapidly most likely due to factor
accumulation. (Ex. China)
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11. What is Hyper-specialization?
 It involves breaking up a sector that is already being
specialized and going into more depth in each of the
new parts (PowerPoint example).
 In their research, they found that low- and middle-
income countries have a fine degree of
specialization in a relatively small number of
products.
 This specific type of hyper-specialization does not fit
standard trade models easily.
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12. What is Hyper-specialization?
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13. What is Hyper-specialization?
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14. Not just Low-income Countries
 Specialization is not solely a function of having
small economies.
 Middle income economies also hyper-specialize
(2008 Examples).
 Exports of most countries are concentrated in a
small number of goods.
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15. What Explains Hyper-
Specialization in Exporting?
 Melitz model(2003) that incorporates Heckscher-
Ohlin model? Not quite
 Eaton and Kortum(2002) take on the Ricardian
model?
 Rodik, Easterly, and Reshef(2009).
 Ideal Model.
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16. Final Discussion
 Middle-income nations are transforming the global
economy
 Questions need to be answered:
 How much of the recent growth in global trade
represents real value added?
 What explains hyper-specialization in exporting?
 Is China’s government pushing the country up the
product ladder?
 What effect has the global commodity boom had on
living standards in low-income countries?
Econ 366
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17. Group:
Bryce Hollingsworth, Meiyi
Cheng, Daniel Mena, James Hill