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Export Variety and Country Productivity

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  • Robert C. Feenstra
  • Hiau Looi Kee

Abstract

This paper provides evidence on monopolistic competition models with endogenous technology by studying the effects of sectoral export variety on country productivity. The effects are estimated in a translog GDP function system based on data for 34 countries from 1982 to 1997. Country productivity is constructed and export variety is shown to be significant. Instruments such as tariffs, transport costs, and distance are shown to affect country productivity through export variety, and only through this channel. Overall, while export variety accounts for only 2% of cross-country productivity differences, it explains 13% of within-country productivity growth. A 10% increase in the export variety of all industries leads to a 1.3% increase in country productivity, while a 10 percentage point increase in tariffs facing an exporting country leads to a 2% fall in country productivity.

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File URL: http://www.nber.org/papers/w10830.pdf
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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10830.

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Date of creation: Oct 2004
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Publication status: published as Feenstra, Robert C. and Hiau Looi Kee. “Export Variety and Country Productivity: Estimating the Monopolistic Competition Model with Endogenous Productivity.” Journal of International Economics (March 2008): 500-514.
Handle: RePEc:nbr:nberwo:10830

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  1. Christian Broda & David E. Weinstein, 2004. "Globalization and the Gains from Variety," NBER Working Papers 10314, National Bureau of Economic Research, Inc.
  2. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2003. "Plants and Productivity in International Trade," American Economic Review, American Economic Association, vol. 93(4), pages 1268-1290, September.
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