International trade and the sectoral composition of production

This article explores the interrelations between global economic growth and the changing composition of trade. I define a global unbalanced growth path as a situation in which there exists a global constant return to capital. I use this definition to explore two claims regarding the sectoral composition of trade. First, in the long run, the comparative advantage is driven by the TFP differential, which explains the fact that less developed countries tend to export primaries even though primaries are not less capital intensive. Second, non-homothetic preferences imply that, as the global economy develops, fewer countries export only or mostly primaries.