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Overall Specialization and Income: Countries Diversify

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  • Luca De Benedictis

    ()
    (DIEF - University of Macerata - Italy)

  • Marco Gallegati

    ()
    (DEA - Universita' Politecnica delle Marche - Italy)

  • Massimo Tamberi

    ()
    (DEA - Universita' Politecnica delle Marche - Italy)

Abstract

This paper gives evidence to a stylized fact often disregarded in international trade empirics: countries' diversification. In the last fifteen years, the growth of world trade coexisted with the tendency of countries to reduce the specialization of their export composition along the development path. On average, countries do not specialize, they diversify. Our semiparametric empirical analysis shows how this result is robust to the use of different statistical indexes used to measure trade specialization to the level of sectoral aggregation and to the level of smoothing in the nonparametric term associated to income per capita. Using a General Additive Model (GAM) with country-specific fixed-effect, we show that, controlling for countries heterogeneity, sectoral export diversification increases with income.

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Bibliographic Info

Paper provided by Sapienza University of Rome, CIDEI in its series Working Papers with number 73.

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Handle: RePEc:rsp:wpaper:73

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Keywords: International Trade; Specialization; Development; Generalized Additive Models;

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  1. Kalemli-Ozcan, S. & Sorensen, B.E. & Yosha, O., 1999. "Risk Sharing and Industrial Specialization: Regional and International Evidence," Papers 16-99, Tel Aviv.
  2. Acemoglu, Daron & Zilibotti, Fabrizio, 1997. "Was Prometheus Unbound by Chance? Risk, Diversification, and Growth," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 709-51, August.
  3. Imbs, Jean & Wacziarg, Romain, 2000. "Stages of Diversification," CEPR Discussion Papers 2642, C.E.P.R. Discussion Papers.
  4. Stephen Redding, 2002. "Specialization dynamics," LSE Research Online Documents on Economics 210, London School of Economics and Political Science, LSE Library.
  5. Mary Amiti, 1997. "Specialisation Patterns in Europe," CEP Discussion Papers dp0363, Centre for Economic Performance, LSE.
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  7. Peretto, Pietro F., 2003. "Endogenous market structure and the growth and welfare effects of economic integration," Journal of International Economics, Elsevier, vol. 60(1), pages 177-201, May.
  8. Nancy L Stokey, 1986. "Learning-by-Doing and the Introduction of New Goods," Discussion Papers 699, Northwestern University, Center for Mathematical Studies in Economics and Management Science, revised May 1987.
  9. Luca De Benedictis & Massimo Tamberi, 2004. "Overall Specialization Empirics: Techniques and Applications," Open Economies Review, Springer, vol. 15(4), pages 323-346, October.
  10. Robert C. Feenstra & Andrew K. Rose, 2000. "Putting Things In Order: Trade Dynamics And Product Cycles," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 369-382, August.
  11. Miklos Koren & Silvana Tenreyro, 2003. "Diversification and development," Working Papers 03-3, Federal Reserve Bank of Boston.
  12. John DiNardo & Justin L. Tobias, 2001. "Nonparametric Density and Regression Estimation," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 11-28, Fall.
  13. James Proudman & Stephen Redding, 2000. "Evolving patterns of international trade," LSE Research Online Documents on Economics 206, London School of Economics and Political Science, LSE Library.
  14. Andrea Brasili & Paolo Epifani & Rodolfo Helg, 2000. "On the Dynamics of Trade Patterns," International Trade 0004006, EconWPA.
  15. Krugman, Paul, 1987. "The narrow moving band, the Dutch disease, and the competitive consequences of Mrs. Thatcher : Notes on trade in the presence of dynamic scale economies," Journal of Development Economics, Elsevier, vol. 27(1-2), pages 41-55, October.
  16. Luca De Benedictis & Marco Gallegati & Massimo Tamberi, 2007. "Semiparametric analysis of the specialization-income relationship," Applied Economics Letters, Taylor & Francis Journals, vol. 15(4), pages 301-306.
  17. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2006. "Trading Partners and Trading Volumes," DEGIT Conference Papers c011_022, DEGIT, Dynamics, Economic Growth, and International Trade.
  18. Christian Broda & David W. Weinstein, 2004. "Variety Growth and World Welfare," American Economic Review, American Economic Association, vol. 94(2), pages 139-144, May.
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Citations

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Cited by:
  1. Aleksandra Parteka, 2010. "Employment and export specialisation along the development path: some robust evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 145(4), pages 615-640, January.
  2. Cabral, Manuel Heredia Caldeira & Veiga, Paula, 2010. "Determinants Of Export Diversification And Sophistication In Sub-Saharan Africa," FEUNL Working Paper Series wp550, Universidade Nova de Lisboa, Faculdade de Economia.
  3. Jyrki Ali-Yrkkö & Neil Foster-McGregor & Doris Hanzl-Weiss & Petri Rouvinen & Timo Seppälä & Robert Stehrer & Roman Stöllinger & Pekka Ylä-Anttila, 2011. "Trade in Intermediate Products and EU Manufacturing Supply Chains," wiiw Research Reports 369, The Vienna Institute for International Economic Studies, wiiw.
  4. Jorge Braga de Macedo & Luís Brites Pereira, 2014. "Cape Verde and Mozambique as Development Successes in West and Southern Africa," NBER Chapters, in: African Successes: Sustainable Growth National Bureau of Economic Research, Inc.
  5. João Amador & Sónia Cabral & José R. Maria, 2007. "International Trade Patterns over the Last Four Decades: How does Portugal Compare with other Cohesion Countries?," Working Papers w200714, Banco de Portugal, Economics and Research Department.
  6. João Amador & Sónia Cabral & José R. Maria, 2007. "Export Specialization Over the Last Four Decades: How Does Portugal Compare With Other Cohesion Countries?," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.

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