Criss-Crossing Globalization : Uphill Flows of Skill-Intensive Goods and Foreign Direct Investment

This paper documents an unusual and possibly significant phenomenon: the export of skills, embodied in goods, services or capital from poorer to richer countries. The authors first present a set of stylized facts. Then, using a measure that combine...

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Bibliographic Details
Main Authors:	Mattoo, Aaditya, Subramanian, Arvind
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ADVANCED COUNTRIES AFFILIATED ORGANIZATIONS APARTHEID BALANCE OF PAYMENTS BANK POLICY BENEFITS OF TRADE CAPITAL STOCK COMPARATIVE ADVANTAGE COMPETITIVENESS COUNTRY FIXED EFFECTS COUNTRY TO COUNTRIES DEVELOPED COUNTRIES DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DISCLOSURE DISCLOSURE REQUIREMENTS DOMESTIC PRODUCERS ECONOMIC INTEGRATION ECONOMIC PERFORMANCE ECONOMIES OF SCALE EMERGING MARKET EMERGING MARKET COUNTRIES EMERGING MARKETS EMERGING MULTINATIONALS EQUILIBRIUM EXPORT BASKET EXPORT FLOWS EXPORT PRODUCTION EXPORTERS EXPORTS FINANCIAL FLOWS FIXED COSTS FLOWS OF CAPITAL FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN FIRMS FOREIGN MARKETS FOREIGN PRODUCERS FOREIGN TRADE GDP GDP PER CAPITA GLOBALIZATION GROWTH THEORIES HUMAN CAPITAL IMPERFECT COMPETITION IMPORTS INCOME INCOME LEVEL INDUSTRIAL COUNTRIES INSTRUMENT INTERNATIONAL BANK INTERNATIONAL ECONOMICS INTERNATIONAL TRADE INVESTING INVESTMENT PROJECTS LOW INTEREST RATES MARKET STRUCTURE MERGERS MICRO DATA OFFSHORE FINANCIAL CENTERS PER CAPITA INCOME PER CAPITA INCOMES PRODUCT DIFFERENTIATION PRODUCTIVITY RETURNS RULE OF LAW SAVINGS STOCKS TECHNOLOGY TRANSFER TRADE DATA TRADE MODELS TRADING TRANSACTION TRUST FUND VIRTUOUS CYCLE WAGES WORLD INVESTMENT REPORT WORLD TRADE
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090910134156 http://hdl.handle.net/10986/4239

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Summary:	This paper documents an unusual and possibly significant phenomenon: the export of skills, embodied in goods, services or capital from poorer to richer countries. The authors first present a set of stylized facts. Then, using a measure that combines the sophistication of a country s exports with the average income level of destination countries, they show that the performance of a number of developing countries - notably China, Mexico and South Africa - matches that of much more advanced countries - such as Japan, Spain and the United States. The authors create a new combined dataset on foreign direct investment (covering greenfield investment as well as mergers and acquisitions). The analysis shows that flows of foreign direct investment to developed countries from developing countries - like Brazil, India, Malaysia and South Africa - as a share of their GDP, are as large as flows from developed countries - like Japan, Korea and the United States. The authors suggest that it is not just the composition of exports but their destination that matters. In both cross-sectional and panel regressions, with a range of controls, a measure of uphill flows of sophisticated goods is significantly associated with better growth performance. These results suggest the need for a deeper analysis of whether the benefits of development might derive not from deifying comparative advantage but from defying it.

Criss-Crossing Globalization : Uphill Flows of Skill-Intensive Goods and Foreign Direct Investment

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