This paper sheds new light on the relationship between openness and industrial specialization. The roles of trade and financial openness, separately and in conjunction with each other, are unraveled to study specialization patterns for a panel of 30 countries for more than three decades. Results show that trade openness has a stronger association with industrial specialization in countries with a low degree of intra-industry trade, whereas financial openness has a stronger association with specialization in countries with more developed financial systems. Further, the effect of trade (financial) openness on specialization is enhanced by the level of financial (trade) openness.
- g29 - Financial Institutions and Services: Other
- f15 - Economic Integration
- f14 - Empirical Studies of Trade
- c23 - "Single Equation Models; Single Variables: Models with Panel Data; Longitudinal Data; Spatial Time Series"
- l60 - Industry Studies: Manufacturing: General
- Financial openness
- BUSINESS-CYCLE SYNCHRONIZATION
- MARKET INTERDEPENDENCE
- Trade openness
- SUDDEN STOPS