Across-Product versus Within-Product Specialization in International Trade∗

The unit values of US manufacturing imports vary widely within very narrowly defined products. In cross-section, unit values are higher for varieties exported by capital and skill abundant countries, and they increase with the capital intensity of exporters’ production techniques. Over time, the same products increasingly are sourced from more disparate countries. These facts reject ‘old’ trade theory specialization across products but are consistent with such specialization within products: capital abundant countries use their endowment advantage to manufacture varieties that are superior in terms of quality or attributes to those produced by labor abundant countries. The facts are inconsistent with ‘new’ trade theory models that have producer price varying inversely with producer productivity because unit values are higher for the set of countries commonly thought to be more productive.