We tend to think of sophisticated goods and foreign direct investments (FDI) as flowing from high-income countries to lower-income countries, but flows in the opposite direction are increasing in frequency and significance.
In this working paper, CGD senior fellow Arvind Subramanian and co-author Aaditya Mattoo document this trend and explore its consequences on source countries. Considering not only the composition of exports but their destination as well, they find a positive relationship between the uphill flows of sophisticated goods and FDI and economic growth, suggesting perhaps that development benefits might derive not from deifying comparative advantage but from defying it.
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