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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.

Comparative advantage --- Competitiveness --- Debt Markets --- Development economics --- Economic integration --- Economic performance --- Economic Theory and Research --- Economies of scale --- Emerging Markets --- Exports --- Finance and Financial Sector Development --- Fixed costs --- GDP --- GDP per capita --- Growth theories --- Human capital --- Imperfect competition --- Income --- International Economics & Trade --- International trade --- Investment and Investment Climate --- Macroeconomics and Economic Growth --- Mergers --- Per capita income --- Per capita incomes --- Private Sector Development --- Product differentiation --- Productivity --- Public Sector Development --- Trade Policy

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

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.

Comparative advantage --- Competitiveness --- Debt Markets --- Development economics --- Economic integration --- Economic performance --- Economic Theory and Research --- Economies of scale --- Emerging Markets --- Exports --- Finance and Financial Sector Development --- Fixed costs --- GDP --- GDP per capita --- Growth theories --- Human capital --- Imperfect competition --- Income --- International Economics & Trade --- International trade --- Investment and Investment Climate --- Macroeconomics and Economic Growth --- Mergers --- Per capita income --- Per capita incomes --- Private Sector Development --- Product differentiation --- Productivity --- Public Sector Development --- Trade Policy