The sweeping changes in the world economy over the past twenty-five years have transformed the nature and scale of trade flows between countries. The entry of the emerging market powers to the international arena has altered traditional patterns of specialization, and obliged the advanced economies to redefine their role in the global economy. In this scenario, vertical differentiation – whose core component is the relative quality of a product – becomes the new terrain in which advanced economies can enjoy a comparative advantage over their emerging competitors.

This book examines vertical differentiation patterns in the exports of a series of countries, as well as analyzing their horizontal specialization across sectors. The information compiled refers to over 5,000 products and 150 economies. The study provides data and indicators to track the progress of countries’ export sophistication and its implications for their levels of per capita income, with particular attention to the Spanish economy. After diagnosing Spain’s strengths and weaknesses in this regard, the authors stress the need for solid improvement in the productive sophistication and vertical differentiation of exports in each industry, leveraging the strong diversification which is a hallmark of the Spanish foreign sector.

This publication rounds off the survey of international trade specialization which the authors initiated in a previous book (2012) arising from the Fundación BBVA-Ivie program on international trade and integration.
It will find interested readers among researchers, economists and members of the public keen to learn more about the dynamics of the global economy and the challenges facing Spain.