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On the Comparative Advantage of U.S. Manufacturing: Evidence from the Shale Gas Revolution

Author

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  • Arezki, Rabah

    (International Monetary Fund)

  • Fetzer, Thiemo

    (Department of Economics, University of Warwick)

Abstract
This paper provides the first empirical evidence of the newly found comparative advantage of the United States manufacturing sector following the so-called shale gas revolution. The revolution has led to (very) large and persistent differences in the price of natural gas between the United States and the rest of the world owing to the physics of natural gas. Results show that U.S. manufacturing exports have grown by about 6 percent on account of their energy intensity since the onset of the shale revolution. We also document that the U.S. shale revolution is operating both at the intensive and extensive margins.

Suggested Citation

  • Arezki, Rabah & Fetzer, Thiemo, 2016. "On the Comparative Advantage of U.S. Manufacturing: Evidence from the Shale Gas Revolution," The Warwick Economics Research Paper Series (TWERPS) 1106, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:1106
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    9. Dussaux, Damien & Monjon, Stéphanie, 2023. "Selling under other skies when energy prices skyrocket: How do the companies adapt their export strategy when energy prices rise?," Energy Policy, Elsevier, vol. 183(C).
    10. Kirat, Yassine, 2021. "The US shale gas revolution: An opportunity for the US manufacturing sector?," International Economics, Elsevier, vol. 167(C), pages 59-77.
    11. Bajo-Buenestado, Raúl, 2018. "Relationship-specificity, incomplete contracts, and the pattern of trade: A comment on the role of natural resources," Energy Economics, Elsevier, vol. 75(C), pages 410-422.
    12. Wang, Qiang & Li, Shuyu & Li, Rongrong & Ma, Minglu, 2018. "Forecasting U.S. shale gas monthly production using a hybrid ARIMA and metabolic nonlinear grey model," Energy, Elsevier, vol. 160(C), pages 378-387.
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    More about this item

    Keywords

    manufacturing ; exports ; energy prices ; shale gas;
    All these keywords.

    JEL classification:

    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • N52 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - U.S.; Canada: 1913-
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • L71 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Hydrocarbon Fuels

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