I use the 1994 OECD Structural Analysis database, which provides statistics
on output for 33 manufacturing industries in II OECD countries over the pe
riod 1970 to 1993. I find that in 1970, these countries tended to specializ
e manufacturing production in very different industries and that most count
ries retained their specialization between 1970 and 1993. I conclude that t
he general stability in industries of specialization over time lends suppor
t to the increasing internal returns to scale models and tends to contradic
t the standard factor-price equalization models. The results of this paper
also suggest that increasing internal returns to scale and learning-by-doin
g may serve as a complement to potent protection and other forms of intelle
ctual property rights.