A Comparison of Specialisation Gains from Trade in Final and Intermediate Goods.

This paper sets out a method for measuring and comparing the specialization gains from trade in intermediate goods and final goods. The factor input requirements of domestic production to replace imported intermediates is compared with the factor requirements of the 'compensating' exports required to purchase the imports. Estimates of net factor-usage, or saving, on individual factor and multifactor bases are reported for a twenty-eight sector model of the United Kingdom. The results indicate that in 1979 trade was net labor-using, and net-capital and land-saving, and the multifactor gain from trade in intermediates was 3.01 percent of GD while for trade in final goods it was 1.73 percent. Copyright 1997 by Scottish Economic Society.