The Effect of Trade Shifts on Capacity

We want to try and see whether or not there is some evidence for this idea that if I shift into producing more complex goods, that's my capability grow faster. And indeed, we find that your capability does grow faster when you're kind of pushed into producing these more complex goods by the entry of other countries into the world trade organization. So that's some support for this key mechanism whereby what you produce affects your growth rate. Now, however, your model does hold out the tantalizing possibility that every country can climb the ladder. We'd expect to see potentially Italy being pushed up in capability and Bangladesh being pushed down as we talked about earlier.