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Economic Development And The Margins Of Trade: Are The Least Developed Countries Different?

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  • Jesse Mora
  • Michael Olabisi

Abstract

We show that for the least‐developed countries (LDCs), the number of exporters is relatively more important than the average exporter size for explaining both export growth and economic development. To guide our analysis, we develop a theoretical model that links the impact of productivity shocks to institutional differences between country groups. Empirically, we find a positive relationship between the extensive margin and economic development for LDCs, but not for middle‐income and high‐income economies; and, on the intensive margin, the relationship is strongest for high‐income countries. The findings imply that the drivers of export growth and economic development for the poorest countries differ significantly from growth drivers in other country groups.( JEL F12, F43, O47)

Suggested Citation

  • Jesse Mora & Michael Olabisi, 2021. "Economic Development And The Margins Of Trade: Are The Least Developed Countries Different?," Economic Inquiry, Western Economic Association International, vol. 59(2), pages 600-621, April.
    • Handle: RePEc:bla:ecinqu:v:59:y:2021:i:2:p:600-621
    DOI: 10.1111/ecin.12937
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    Cited by:

    1. Mora, Jesse & Olabisi, Michael, 2023. "Economic development and export diversification: The role of trade costs," International Economics, Elsevier, vol. 173(C), pages 102-118.

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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