Keywords: specialisation, comparative advantage, increasing internal returns to scale
How persistent is industry specialisation over time in industrialised countries?
I use the 1994 OECD Structural Analysis database, which provides statistics on output for 33 manufacturing industries in 14 OECD countries over the period 1970 to 1993. I find that in 1970, these countries tended to specialise manufacturing production in very different industries and that most countries retained their specialisation between 1970 and 1993. I conclude that the general stability in industries of specialisation over time lends support to the increasing internal returns to scale models and tends to contradict the standard factor-price equalisation models. The results of this paper also suggest that increasing internal returns to scale and learning-by-doing may serve as a complement to patent protection and other forms of intellectual property rights.