01828cas a2200241 a 4500 AALejournalIMF002679 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451875614 1018-5941 BD-DhAAL BD-DhAAL Koren, Miklos. Financial Globalization, Portfolio Diversification, and the Pattern of International Trade / Miklos Koren. Washington, D.C. : International Monetary Fund, 2003. 1 online resource (47 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The paper provides a general-equilibrium model where incomplete international financial markets lead to insufficient industrial specialization and low international trade. As international portfolio diversification is limited and productivity is uncertain, investors wish to maintain a diversified industrial structure rather than specializing according to their comparative advantage. Financial globalization then induces more specialization and more trade. The present framework yields explicit closed-form solutions for the volume and the structure of trade. Empirical results support the implications of the theory. Trade in financially open countries is (i) higher, (ii) more dependent on productivity differences, and (iii) less sensitive to industry risks. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2003/233 Full text available on IMF http://elibrary.imf.org/view/journals/001/2003/233/001.2003.issue-233-en.xml IMF e-Library