Implied comparative advantage

The comparative advantage of a location shapes its industrial structure. Current theoretical models based on this principle do not take stance how advantages in different industries or locations are related with each other, what such patterns relatedness might imply about the evolution advantage. We build simple Ricardian-inspired model and show that hidden information inter-industry inter-location can be captured by correlations between observed structure across locations, industries. then use recovered to calculate measure implied advantage, it explains much location’s current give evidence these present wide variety contexts, namely export goods (internationally) employment, payroll number establishments subnational regions (in US, Chile India). In cases, deviations past tend highly predictive future industry growth, especially at horizons decade more; explanatory power holds both intensive as well extensive margin. These results suggest component long-term is already today’s production.