Determinants of Trade in Parts and Components : An Empirical Analysis

The rapid rise of trade in part of components –in the context of an increasingly important global production chain – is a key future of Asia's economic miracle. This paper aims at analyzing empirically what are key determinants of trade in parts and components. The focus is Latin America and Asia so as to draw relevant lesson for the former to the latter. The success keys of Greater China and Mexico, within the Latin American region could, thus, be explained, at least partially by identifying such key determinants. Our results show that the size of the economy (GDP), human capital, labor costs and the institutional/infrastructural framework have played in enabling regions to develop their comparative advantages of trade in parts and components