Diverse Trade Pattern, Complementarity and Fragmentation

Abstract

The major deficiency of the theories, used to explain wage movements in Southern countries, is a complete overlook of the diverse trade pattern reflected in the skill-intensity of their export items. Such diverse trade pattern cannot be effectively captured through an aggregative index of skill-intensity of exports. For example, India’s export pattern alone reveals the drawback of such aggregate measures. From exporter of primary and agricultural products at large, India has emerged as a major exporter of software that is by any measure highly skill-intensive. Liberalization of investment and export opportunities has fuelled a boom in high-technology products that involve good deal of skilled labour. Thus, despite agricultural products being exported, it would not only be unfair but also perverse to assume India’s exports as relatively unskilled-labour intensive while analyzing the terms of trade (TOT) and wage-gap nexus there. Quite a few East Asian and Latin American countries also have a wide range of skill-intensive exports.