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The benefits of industrial specialization are widely recognized, but with uninsured production risk, the higher variance of gross domestic product (GDP) resulting from specialized output may entail a welfare loss that outweighs those benefits. The argument was formulated by William Brainard and Richard Cooper (1968), Murray Kemp and Nissan Liviatan (1973), and Roy Ruffin (1974). In response, Elhanan Helpman and Assaf Razin (1978) showed that if production risk can be insured through trade in assets, the benefits of specialization will resurface. 1 This work has consequences for the theory of economic growth as shown by Jeremy Greenwood and Boyan Jovanovic (1990), Gilles Saint-Paul (1992), Maurice Obstfeld (1994a), Daron Acemoglu and Fabrizio Zilibotti (1997), and JoAnne Feeney (1999). 2 No evidence has been brought to bear on this important economic mechanism and this is the task undertaken …