6533b859fe1ef96bd12b6fbe

RESEARCH PRODUCT

Does complexity explain the structure of trade?

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This paper analyzes whether complexity, measured by the number of skilled tasks that are performed in production, explains countries commodity trade structure. We modify the Romalis ( ) model to incorporate advantage differences in complexity across commodities together with differences in the number of mistakes made by workers in the production process in developed and developing countries as a source of comparative advantage. Our model predicts that the share of developed countries in world trade increases with products complexity. Empirical tests confirm this prediction. Moreover, we find that complexity complements the explanation provided by skillintensity on countries commodity trade structure.