Reassessing EU comparative advantage : the role of technology / Filippo di Mauro, Marco Matani, Gianmarco Ottaviano ; editor: Halle Institute for Economic Research (IWH) - Member of the Leibniz Association

Abstract

Based on the sufficient statistics approach developed by Huang and Ottaviano (2024), we show how the state of technology of European industries relative to the rest of the world can be empirically assessed in a way that is simple in terms of computation, parsimonious in terms of data requirements, but still comprehensive in terms of information. The lack of systematic cross-industry correlation between export specialization and technological advantage suggests that standard measu-res of revealed comparative advantage only imperfectly capture a country’s tech-nological prowess due to the concurrent influences of factor prices, market size, markups, firm selection and market share reallocation.