The New EU’s External Action: A significant step forward towards the EU’s single voice?ction problems and rhetorical action

The aim of this paper is to analyse the main agreements on the EU’s External Action agreed within the European Convention and the IGC taking into account why, how and who reached the consensus on them. In other words, this paper will explore the principles followed in order to improve the instruments of the EU’s External Action such as authority, coherence, visibility, efficiency and credibility.

T cells dampen innate immune responses through inhibition of NLRP1 and NLRP3 inflammasomes.

Inflammation is a protective attempt by the host to remove injurious stimuli and initiate the tissue healing process. The inflammatory response must be actively terminated, however, because failure to do so can result in 'bystander' damage to tissues and diseases such as arthritis or type-2 diabetes. Yet the mechanisms controlling excessive inflammatory responses are still poorly understood. Here we show that mouse effector and memory CD4(+) T cells abolish macrophage inflammasome-mediated caspase-1 activation and subsequent interleukin 1beta release in a cognate manner. Inflammasome inhibition is observed for all tested NLRP1 (commonly called NALP1) and NLRP3 (NALP3 or cryopyrin) activators, whereas NLRC4 (IPAF) inflammasome function and release of other inflammatory mediators such as CXCL2, interleukin 6 and tumour necrosis factor are not affected. Suppression of the NLRP3 inflammasome requires cell-to-cell contact and can be mimicked by macrophage stimulation with selected ligands of the tumour necrosis factor family, such as CD40L (also known as CD40LG). In a NLRP3-dependent peritonitis model, effector CD4(+) T cells are responsible for decreasing neutrophil recruitment in an antigen-dependent manner. Our findings reveal an unexpected mechanism of inflammasome inhibition, whereby effector and memory T cells suppress potentially damaging inflammation, yet leave the primary inflammatory response, crucial for the onset of immunity, intact.

The Common Strategy on the Mediterranean Region: Evidence and Analysis

The present working paper aims at assessing the Common Strategy on the Mediterranean, taking into account its possible articulation as a coherent instrument of the European Foreign Policy. The study wants to answer some questions related to this instrument. The Common Strategy on the Mediterranean is an excellent case study and is a potential source of several questions about the external action of the European Union. Specifically, the present study has in mind two main questions to answer. Firstly, which are the main reasons behind the adoption of this instrument of the European Foreign Policy? In other words, which was/is the rationale for the existence of this Common Strategy? Secondly, which is the real impact of the Common Strategy? Which are its real achievements?

Time processing in visual cortices: How the visual brain encodes and keeps track of time

Time is embedded in any sensory experience: the movements of a dance, the rhythm of a piece of music, the words of a speaker are all examples of temporally structured sensory events. In humans, if and how visual cortices perform temporal processing remains unclear. Here we show that both primary visual cortex (V1) and extrastriate area V5/MT are causally involved in encoding and keeping time in memory and that this involvement is independent from low-level visual processing. Most importantly we demonstrate that V1 and V5/MT are functionally linked and temporally synchronized during time encoding whereas they are functionally independent and operate serially (V1 followed by V5/MT) while maintaining temporal information in working memory. These data challenge the traditional view of V1 and V5/MT as visuo-spatial features detectors and highlight the functional contribution and the temporal dynamics of these brain regions in the processing of time in millisecond range. The present project resulted in the paper entitled: 'How the visual brain encodes and keeps track of time' by Paolo Salvioni, Lysiann Kalmbach, Micah Murray and Domenica Bueti that is now submitted for publication to the Journal of Neuroscience.

When zero doesn't mean it and other geomathematical mischief

There is almost not a case in exploration geology, where the studied data doesn’tincludes below detection limits and/or zero values, and since most of the geological dataresponds to lognormal distributions, these “zero data” represent a mathematicalchallenge for the interpretation.We need to start by recognizing that there are zero values in geology. For example theamount of quartz in a foyaite (nepheline syenite) is zero, since quartz cannot co-existswith nepheline. Another common essential zero is a North azimuth, however we canalways change that zero for the value of 360°. These are known as “Essential zeros”, butwhat can we do with “Rounded zeros” that are the result of below the detection limit ofthe equipment?Amalgamation, e.g. adding Na2O and K2O, as total alkalis is a solution, but sometimeswe need to differentiate between a sodic and a potassic alteration. Pre-classification intogroups requires a good knowledge of the distribution of the data and the geochemicalcharacteristics of the groups which is not always available. Considering the zero valuesequal to the limit of detection of the used equipment will generate spuriousdistributions, especially in ternary diagrams. Same situation will occur if we replace thezero values by a small amount using non-parametric or parametric techniques(imputation).The method that we are proposing takes into consideration the well known relationshipsbetween some elements. For example, in copper porphyry deposits, there is always agood direct correlation between the copper values and the molybdenum ones, but whilecopper will always be above the limit of detection, many of the molybdenum values willbe “rounded zeros”. So, we will take the lower quartile of the real molybdenum valuesand establish a regression equation with copper, and then we will estimate the“rounded” zero values of molybdenum by their corresponding copper values.The method could be applied to any type of data, provided we establish first theircorrelation dependency.One of the main advantages of this method is that we do not obtain a fixed value for the“rounded zeros”, but one that depends on the value of the other variable.Key words: compositional data analysis, treatment of zeros, essential zeros, roundedzeros, correlation dependency

Transforming personal experience and emotions through education to cultural diversity: an interplay between unicity and genericity

When subjects studied at school are close to societal discourses and to the students' social identities, when they have high emotional resonance, is it possible to enable the students to distance themselves from their emotions and personal experience, and to conceptualise them? Examining the relation between emotion and learning through the lens of socio-cultural psychology, the aim of our study was to shed light on "secondarisation" processes, that is, processes that transform personal experience and emotions into conceptualised forms of thinking. We analysed 85 video-recorded lessons in education for cultural diversity involving 12 teachers (of primary and secondary schools). Having identified episodes in which emotions were put into words or personal experience was reported, we analysed the use of pronouns (taken as indicators of secondarisation processes) and found a recurrent pattern: "the unicity-genericity routine". We illustrate the functioning of this routine with various excerpts taken from lessons in education for diversity taught in the classes of two teachers in primary school. The results show that the interplay between unicity and genericity works as a discursive resource for the development of secondarisation processes.

Oxygen uptake of isolated toad skin epithelium: micromeasurement and effect of ionic acclimation.

Oxidative metabolism of isolated toad skin epithelium (Bufo viridis) was investigated in vitro under open-circuit conditions using the spectrophotometric oxyhemoglobin micromethod. This highly sensitive technique has been adapted for studying several epithelia in parallel and for detecting possible regional variations of oxygen uptake in individual epithelium. Changes in the proportion of mitochondria-rich cells (MRC) by ionic acclimation affected oxidative metabolism under nontransporting condition. After acclimation of animals to either NaNO3 or NaCl solutions (100 mmol/l, for greater than 2 wk), the number of MRC per square millimeter in epithelia from nonacclimated and NaNO3- and NaCl-acclimated animals was 350 +/- 113, 460 +/- 196, and 107 +/- 52, respectively. O2 uptake of nonacclimated and NaNO3-acclimated epithelia was significantly higher than that of NaCl-acclimated epithelia (i.e., 0.89 and 0.90 vs. 0.57 nmol O2.h-1.mm-2, respectively). The correlation established between O2 uptake and number of MRC allowed evaluation of the respiration rate of one single MRC, i.e., approximately 1 pmol O2/h. The lowest mitochondrial oxidative activity was found in the epithelia from NaCl-acclimated toads where the uncoupler 2,4-dinitrophenol (50 mumols/l) had the highest relative stimulatory effect (+114%). Acetazolamide (50 mumols/l), a potent inhibitor of carbonic anhydrase mainly present in the MRC, reduced selectively by 31% O2 uptake of the MRC-rich epithelia (NaNO3 acclimated). O2 uptake increased significantly by approximately 80% when basolateral pH increased from 5.8 to 7.8, but did not depend on apical pH. These findings indicate that under nontransporting (open-circuit) conditions, aerobic metabolism of the isolated toad skin epithelium is related to the density and/or characteristics of the MRC.(ABSTRACT TRUNCATED AT 250 WORDS)

The biochemistry of drug metabolism--an introduction: part 5. Metabolism and bioactivity.

This review continues a general presentation of the metabolism of drugs and other xenobiotics begun in five recent issues of Chemistry & Biodiversity. The present Part is dedicated to the pharmacological and toxicological consequences of drug and xenobiotic metabolism. In other words, the key concepts here are activation vs. deactivation, toxification vs. detoxification, and their interplay. These concepts are illustrated with a number of medicinally, toxicologically, and environmentally relevant examples. But, far from being concerned only with individual cases, the review is based on broad classifications, global rationalizations, and synthetic hypotheses.

Differential migration of in vivo primed B and T lymphocytes to lymphoid and non-lymphoid organs.

Our study describes tissue-specific migration of T and B cells during a localized anti-viral immune response. After mouse mammary tumor virus (MMTV) injection, B lymphocytes of the draining lymph node become infected and present a retroviral superantigen to CD4(+) T lymphocytes. Infected B cells receive superantigen-mediated help in a fashion comparable to classical immune responses. To investigate the fate of T and B lymphocytes that had interacted via cognate help in the same peripheral lymph node microenvironment we adoptively transferred them into naive recipients. Here we show that MMTV-infected B cells and superantigen-stimulated T cells were programmed to migrate to distinct sites of the body. Plasmablasts but not T cells migrated to the mammary gland and activated alpha4beta1 integrins were found to have a crucial role in the migration to the mammary gland. In contrast, T cells had a much higher affinity for secondary lymphoid organs and large intestine. This demonstrates that upon antigen-driven B and T lymphocyte interaction in the local draining lymph node a subset-specific homing program for B and T lymphocytes is induced.

Guidelines for the use and interpretation of assays for monitoring autophagy.

In 2008 we published the first set of guidelines for standardizing research in autophagy. Since then, research on this topic has continued to accelerate, and many new scientists have entered the field. Our knowledge base and relevant new technologies have also been expanding. Accordingly, it is important to update these guidelines for monitoring autophagy in different organisms. Various reviews have described the range of assays that have been used for this purpose. Nevertheless, there continues to be confusion regarding acceptable methods to measure autophagy, especially in multicellular eukaryotes. A key point that needs to be emphasized is that there is a difference between measurements that monitor the numbers or volume of autophagic elements (e.g., autophagosomes or autolysosomes) at any stage of the autophagic process vs. those that measure flux through the autophagy pathway (i.e., the complete process); thus, a block in macroautophagy that results in autophagosome accumulation needs to be differentiated from stimuli that result in increased autophagic activity, defined as increased autophagy induction coupled with increased delivery to, and degradation within, lysosomes (in most higher eukaryotes and some protists such as Dictyostelium) or the vacuole (in plants and fungi). In other words, it is especially important that investigators new to the field understand that the appearance of more autophagosomes does not necessarily equate with more autophagy. In fact, in many cases, autophagosomes accumulate because of a block in trafficking to lysosomes without a concomitant change in autophagosome biogenesis, whereas an increase in autolysosomes may reflect a reduction in degradative activity. Here, we present a set of guidelines for the selection and interpretation of methods for use by investigators who aim to examine macroautophagy and related processes, as well as for reviewers who need to provide realistic and reasonable critiques of papers that are focused on these processes. These guidelines are not meant to be a formulaic set of rules, because the appropriate assays depend in part on the question being asked and the system being used. In addition, we emphasize that no individual assay is guaranteed to be the most appropriate one in every situation, and we strongly recommend the use of multiple assays to monitor autophagy. In these guidelines, we consider these various methods of assessing autophagy and what information can, or cannot, be obtained from them. Finally, by discussing the merits and limits of particular autophagy assays, we hope to encourage technical innovation in the field.

Market Transparency, Market Quality and Sunshine Trading

This paper analyzes the implications of pre-trade transpareny on market performance. We find that transparency increases the precision held by agents, however we show that this increase in precision may not be due to prices themselves. In competitive markets, transparency increases market liquidity and reduces price volatility, whereas these results may not hold under imperfect competition. More importantly, market depth and volatility might be positively related with proper priors. Moreover, we study the incentives for liquidity traders to engage in sunshine trading. We obtain that the choice of sunshine/dark trading for a noise trader is independent of his order size, being the traders with higher liquidity needs more interested in sunshine trading, as long as this practice is desirable. Key words: Market Microstructure, Transparency, Prior Information, Market Quality, Sunshine Trading

Monitoring of human CD4 T cell responses in metastatic melanoma and arthritic patients

SUMMARY : Detailed knowledge of the different components of the immune system is required for the development of new immunotherapeutic strategies. CD4 T lymphocytes represent a highly heterogeneous group of cells characterized by various profiles of cytokine production and effector vs. regulatory functions. They are central players in orchestrating adaptive immune responses: unbalances between the different subtypes can lead either to aggressive autoimmune disorders or can favour the uncontrolled growth of malignancies. In this study we focused on the characterization of human CD4 T cells in advanced stage melanoma patients as well as in patients affected by various forms of autoimmune inflammatory spondyloarthropathies. In melanoma patients we report that a population of FOXP3 CD4 T cells, known as regulatory T cells, is overrepresented in peripheral blood, and even more in tumor-infitrated lymph nodes as well as at tumor sites, as compared to healthy donors. In tumor-infiltrated lymph nodes, but not in normal lymph nodes or in peripheral blood, FOXP3 CD4 T cells feature a highly differentiated phenotype (CD45RA-CCR7+/-), which suggests for a recent encounter with their cognate antigen. FOXP3 CD4 T cells have been described to be an important component of the several known immune escape mechanisms. We demonstrated that FOXP3 CD4 T cells isolated from melanoma patients exert an in vitro suppressive action on autologous CD4 T cells, thus possibly inhibiting an efficient anti-tumor response. Next, we aimed to analyse CD4 T cells at antigen-specific level. In advanced stage melanoma patients, we identified for the first time, using pMHCII multimers, circulating CD4 T cells specific for the melanoma antigen Melan-A, presented by HLA-DQB1 *0602. Interestingly, in a cohort of melanoma patients enrolled in an immunotherapy trails consisting of injection of a Melan-A derived peptide, we did not observe signif cant variations in the ex vivo frequencies of Melan-A specific CD4 T cells, but important differences in the quality of the specific CD4 T cells. In fact, up to 50% of the ex vivo Melan-A/DQ6 specific CD4 T cells displayed a regulatory phenotype and were hypoproliferative before vaccination, while more effector, cytokine-secreting Melan-A/DQ6 specific CD4 T cells were observed after immunization. These observations suggest that peptide vaccination may favourably modify the balance between regulatory and effector tumor-specific CD4 T cells. Finally, we identified another subset of CD4 T cells as possible mediator of pathology in a group of human autoimmune spondyloarthropathies, namely Th17 cells. These cells were recently described to play a critical role in the pathogenesis of some marine models of autommunity. We document an elevated presence of circulating Th17 cells in two members of seronegative spondyloarthropathies, e.g. psoriatic arthritis and ankylosing spondylitis, while we do not observe increased frequencies of Th17 cells in peripheral blood of rheumatoid arthritic patients. In addition, Th17 cells with a more advanced differentiation state (CD45RA-CCR7-CD27-) and polyfunctionality (concomitant secretion of IL-17, IL-2 and TNFα) were observed exclusively in patients with seronegative spondylarthropathies. Together, our observations emphasize the importance of CD4 T cells in various diseases and suggest that immunotherapeutic approaches considering CD4 T cells as targets should be evaluated in the future.

Reverse transcriptase-dependent and -independent phases of infection with mouse mammary tumor virus: implications for superantigen function.

Mouse mammary tumor virus (MMTV) encodes a superantigen (SAg) that promotes stable infection and virus transmission. Upon subcutaneous MMTV injection, infected B cells present SAg to SAg-reactive T cells leading to a strong local immune response in the draining lymph node (LN) that peaks after 6 d. We have used the reverse transcriptase inhibitor 3'-azido-3'-deoxythymidine (AZT) to dissect in more detail the mechanism of SAg-dependent enhancement of MMTV infection in this system. Our data show that no detectable B or T cell response to SAg occurs in AZT pretreated mice. However, if AZT treatment is delayed 1-2 d after MMTV injection, a normal SAg-dependent local immune response is observed on day 6. Quantitation of viral DNA in draining LN of these infected mice indicates that a 4,000-fold increase in the absolute numbers of infected cells occurs between days 2 and 6 despite the presence of AZT. Furthermore MMTV DNA was found preferentially in surface IgG+ B cells of infected mice and was not detectable in SAg-reactive T cells. Collectively our data suggest that MMTV infection occurs preferentially in B cells without SAg involvement and is completed 1-2 d after virus challenge. Subsequent amplification of MMTV infection between days 2 and 6 requires SAg expression and occurs in the absence of any further requirement for reverse transcription. We therefore conclude that clonal expansion of infected B cells via cognate interaction with SAg-reactive T cells is the predominant mechanism for increasing the level of MMTV infection. Since infected B cells display a memory (surface IgG+) phenotype, both clonal expansion and possibly longevity of the virus carrier cells may contribute to stable MMTV infection.

Language lateralization in early and late bilinguals using an international vocabulary

In lateralized Lexical Decision Tasks (LDT), accuracy is commonly higher and reaction times are commonly faster for right visual field (RVF) than left visual field (LVF) presentations. This visual field differences are thought to demonstrate the left hemisphere's dominance for language. Unfortunately, different tasks and words are used between studies and languages making direct comparisons difficult. For example, high frequency words show a performance advantage over low frequency words. Moreover, demographic variables impact on lateralized behavior such as language knowledge (one versus several, early acquired versus late acquired). We here aim to alleviate some of these obstacles by presenting results from a lateralized LDT for which we selected words between 4 and 6 letters used in five different languages, i.e. English, French, German, Dutch and Italian. In this first study using these words, we compared performance of right- and left-handed students being either early or late bilinguals (acquired before or after the age of 6 years) from a French-speaking University in Switzerland. Results showed a left hemispheric advantage (accuracy, reaction times) for all groups, with a trend for early as compared to late bilinguals to be less accurate and taking longer in lexical decisions. These results show that the current words result in solid visual field differences, and do so irrespective of how many languages are spoken. While early bilinguals might experience a slight performance disadvantage, it was not affecting visual field differences.

Financial Markets and Real Ecinomy: Four Essays in International Trade

Financial markets play an important role in an economy performing various functions like mobilizing and pooling savings, producing information about investment opportunities, screening and monitoring investments, implementation of corporate governance, diversification and management of risk. These functions influence saving rates, investment decisions, technological innovation and, therefore, have important implications for welfare. In my PhD dissertation I examine the interplay of financial and product markets by looking at different channels through which financial markets may influence an economy.My dissertation consists of four chapters. The first chapter is a co-authored work with Martin Strieborny, a PhD student from the University of Lausanne. The second chapter is a co-authored work with Melise Jaud, a PhD student from the Paris School of Economics. The third chapter is co-authored with both Melise Jaud and Martin Strieborny. The last chapter of my PhD dissertation is a single author paper.Chapter 1 of my PhD thesis analyzes the effect of financial development on growth of contract intensive industries. These industries intensively use intermediate inputs that neither can be sold on organized exchange, nor are reference-priced (Levchenko, 2007; Nunn, 2007). A typical example of a contract intensive industry would be an industry where an upstream supplier has to make investments in order to customize a product for needs of a downstream buyer. After the investment is made and the product is adjusted, the buyer may refuse to meet a commitment and trigger ex post renegotiation. Since the product is customized to the buyer's needs, the supplier cannot sell the product to a different buyer at the original price. This is referred in the literature as the holdup problem. As a consequence, the individually rational suppliers will underinvest into relationship-specific assets, hurting the downstream firms with negative consequences for aggregate growth. The standard way to mitigate the hold up problem is to write a binding contract and to rely on the legal enforcement by the state. However, even the most effective contract enforcement might fail to protect the supplier in tough times when the buyer lacks a reliable source of external financing. This suggests the potential role of financial intermediaries, banks in particular, in mitigating the incomplete contract problem. First, financial products like letters of credit and letters of guarantee can substantially decrease a risk and transaction costs of parties. Second, a bank loan can serve as a signal about a buyer's true financial situation, an upstream firm will be more willing undertake relationship-specific investment knowing that the business partner is creditworthy and will abstain from myopic behavior (Fama, 1985; von Thadden, 1995). Therefore, a well-developed financial (especially banking) system should disproportionately benefit contract intensive industries.The empirical test confirms this hypothesis. Indeed, contract intensive industries seem to grow faster in countries with a well developed financial system. Furthermore, this effect comes from a more developed banking sector rather than from a deeper stock market. These results are reaffirmed examining the effect of US bank deregulation on the growth of contract intensive industries in different states. Beyond an overall pro-growth effect, the bank deregulation seems to disproportionately benefit the industries requiring relationship-specific investments from their suppliers.Chapter 2 of my PhD focuses on the role of the financial sector in promoting exports of developing countries. In particular, it investigates how credit constraints affect the ability of firms operating in agri-food sectors of developing countries to keep exporting to foreign markets.Trade in high-value agri-food products from developing countries has expanded enormously over the last two decades offering opportunities for development. However, trade in agri-food is governed by a growing array of standards. Sanitary and Phytosanitary standards (SPS) and technical regulations impose additional sunk, fixed and operating costs along the firms' export life. Such costs may be detrimental to firms' survival, "pricing out" producers that cannot comply. The existence of these costs suggests a potential role of credit constraints in shaping the duration of trade relationships on foreign markets. A well-developed financial system provides the funds to exporters necessary to adjust production processes in order to meet quality and quantity requirements in foreign markets and to maintain long-standing trade relationships. The products with higher needs for financing should benefit the most from a well functioning financial system. This differential effect calls for a difference-in-difference approach initially proposed by Rajan and Zingales (1998). As a proxy for demand for financing of agri-food products, the sanitary risk index developed by Jaud et al. (2009) is used. The empirical literature on standards and norms show high costs of compliance, both variable and fixed, for high-value food products (Garcia-Martinez and Poole, 2004; Maskus et al., 2005). The sanitary risk index reflects the propensity of products to fail health and safety controls on the European Union (EU) market. Given the high costs of compliance, the sanitary risk index captures the demand for external financing to comply with such regulations.The prediction is empirically tested examining the export survival of different agri-food products from firms operating in Ghana, Mali, Malawi, Senegal and Tanzania. The results suggest that agri-food products that require more financing to keep up with food safety regulation of the destination market, indeed sustain longer in foreign market, when they are exported from countries with better developed financial markets.Chapter 3 analyzes the link between financial markets and efficiency of resource allocation in an economy. Producing and exporting products inconsistent with a country's factor endowments constitutes a serious misallocation of funds, which undermines competitiveness of the economy and inhibits its long term growth. In this chapter, inefficient exporting patterns are analyzed through the lens of the agency theories from the corporate finance literature. Managers may pursue projects with negative net present values because their perquisites or even their job might depend on them. Exporting activities are particularly prone to this problem. Business related to foreign markets involves both high levels of additional spending and strong incentives for managers to overinvest. Rational managers might have incentives to push for exports that use country's scarce factors which is suboptimal from a social point of view. Export subsidies might further skew the incentives towards inefficient exporting. Management can divert the export subsidies into investments promoting inefficient exporting.Corporate finance literature stresses the disciplining role of outside debt in counteracting the internal pressures to divert such "free cash flow" into unprofitable investments. Managers can lose both their reputation and the control of "their" firm if the unpaid external debt triggers a bankruptcy procedure. The threat of possible failure to satisfy debt service payments pushes the managers toward an efficient use of available resources (Jensen, 1986; Stulz, 1990; Hart and Moore, 1995). The main sources of debt financing in the most countries are banks. The disciplining role of banks might be especially important in the countries suffering from insufficient judicial quality. Banks, in pursuing their rights, rely on comparatively simple legal interventions that can be implemented even by mediocre courts. In addition to their disciplining role, banks can promote efficient exporting patterns in a more direct way by relaxing credit constraints of producers, through screening, identifying and investing in the most profitable investment projects. Therefore, a well-developed domestic financial system, and particular banking system, would help to push a country's exports towards products congruent with its comparative advantage.This prediction is tested looking at the survival of different product categories exported to US market. Products are identified according to the Euclidian distance between their revealed factor intensity and the country's factor endowments. The results suggest that products suffering from a comparative disadvantage (labour-intensive products from capital-abundant countries) survive less on the competitive US market. This pattern is stronger if the exporting country has a well-developed banking system. Thus, a strong banking sector promotes exports consistent with a country comparative advantage.Chapter 4 of my PhD thesis further examines the role of financial markets in fostering efficient resource allocation in an economy. In particular, the allocative efficiency hypothesis is investigated in the context of equity market liberalization.Many empirical studies document a positive and significant effect of financial liberalization on growth (Levchenko et al. 2009; Quinn and Toyoda 2009; Bekaert et al., 2005). However, the decrease in the cost of capital and the associated growth in investment appears rather modest in comparison to the large GDP growth effect (Bekaert and Harvey, 2005; Henry, 2000, 2003). Therefore, financial liberalization may have a positive impact on growth through its effect on the allocation of funds across firms and sectors.Free access to international capital markets allows the largest and most profitable domestic firms to borrow funds in foreign markets (Rajan and Zingales, 2003). As domestic banks loose some of their best clients, they reoptimize their lending practices seeking new clients among small and younger industrial firms. These firms are likely to be more risky than large and established companies. Screening of customers becomes prevalent as the return to screening rises. Banks, ceteris paribus, tend to focus on firms operating in comparative-advantage sectors because they are better risks. Firms in comparative-disadvantage sectors finding it harder to finance their entry into or survival in export markets either exit or refrain from entering export markets. On aggregate, one should therefore expect to see less entry, more exit, and shorter survival on export markets in those sectors after financial liberalization.The paper investigates the effect of financial liberalization on a country's export pattern by comparing the dynamics of entry and exit of different products in a country export portfolio before and after financial liberalization.The results suggest that products that lie far from the country's comparative advantage set tend to disappear relatively faster from the country's export portfolio following the liberalization of financial markets. In other words, financial liberalization tends to rebalance the composition of a country's export portfolio towards the products that intensively use the economy's abundant factors.