The neoclassical model of trade predicts that international specialization will be jointly determined by cross-country differences in relative factor endowments and technology levels. This paper specifies an empirical model of specialization consistent with the neoclassical explanation. In the...

Transport time increases with distance traveled, and time is valuable. We show the implications of these facts for global specialization and trade: products where timely delivery is important will be produced near the source of final demand, where wages will be higher as a result. In the model,...