Trade and American Cities: Who has the Comparative Advantage?

Abstract

Metropolitan areas across the United States are quite differentially positioned to benefit from greater international market integration. The authors hypothesizefzat because cities possess quite diverse industrial mixes, their stakes in national trade regimes and appropriate strategies for responding to altered trade opportunities will differ substantially. Using a modified shift-share technique with merged trade and industrial data at the three-digit level, the authors show that cities do indeed range widely in their relative comparative advantages. Furthermore, cities within a single state often have quite different stakes in heightened trade activity; some are better positioned to export, whereas others have more to gain from import protection or policies to strengthen domestic markets. Possessing a port no longer assures a metropolitan area a superior advantage in trade. The authors conclude that cities should study and fashion their own trade policies uniquely to match their existing and future capabilities.