Networks and the Dynamics of Firms' Export Portfolio: Evidence for Mexico
AbstractIn this paper we use network-analysis tools to identify communities in the web of exporters' destinations. Next we use our network-based community measure as predictor of additional countries chosen by firms expanding their export destination portfolio. We defend that our network-based community measure is superior to extended gravity measures. This superiority stems from the fact that community is a revealed measure, is country-specific and can be calculated at the industry level. Using data on Mexican new exporters over the period 2003-2009, we show that the probability of choosing a new export destination multiplies almost by three if it belongs to the same community of any of the firm's previous destinations. The introduction of the network-based community variable improves the accuracy of the model up to 20% relative to a model that only includes gravity and extended gravity variables. We also show that industry-specific communities and general communities play similar roles in determining the dynamics of Mexican exporters' country portfolio.
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Bibliographic InfoPaper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2014003.
Length: 36 pages
Date of creation: Feb 2014
Date of revision:
export market; network analysis; modularity; extended gravity; Mexico;
Find related papers by JEL classification:
- F1 - International Economics - - Trade
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-03-08 (All new papers)
- NEP-INT-2014-03-08 (International Trade)
- NEP-NET-2014-03-08 (Network Economics)
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