Open AccessComparative Advantage Following (CAF) Strategy and Integration into the World Market for Manufactured Export Products
Author(s) -
Sèna Kimm Gnang
Publication year - 2021
Publication title -
global business and economics anthology
Language(s) - English
Resource type - Journals
ISSN - 1553-1392
DOI - 10.47341/gbea.21031
Subject(s) - comparative advantage , revealed comparative advantage , business , foreign direct investment , international economics , stock (firearms) , international trade , market size , world market , market share , export performance , stock market , economics , industrial organization , engineering , geography , macroeconomics , mechanical engineering , context (archaeology) , archaeology , finance
This article investigates the impact of countries' comparative advantage following (CAF) strategy on their integration into the world markets for manufactured exports. The analysis uses a panel dataset of 113 countries (comprising both developed and developing countries) over the period 1995-2015. Based on the two-step system Generalized Method of Moments approach, the findings have shown that the CAF development strategy induces a rise in countries' share of manufactured export products in the world's total manufactured exports. Interestingly, the magnitude of this positive effect of the CAF strategy increases as the size of inward FDI stock rises. An important implication of this analysis is that countries that promote industries in line with their comparative advantage are likely to enjoy a greater integration into the world market for manufactured export products, notably when they experience a greater size of inward FDI stock.