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Explaining the Diversification Path of Exporters in Brazil: How Similar and Sophisticated are New Products?

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Author Info

  • Xavier Cirera

    (IDS and CARIS, University of Sussex)

  • Anabel Marin

    (SPRU, University of Sussex and Conicet, Argentina)

  • Ricardo Markwald

    (FUNCEX, Brazil)

Abstract

A stylised fact of the economic literature suggests that export diversification is good for economic growth and is associated with economic development. In addition, there is evidence suggesting that the level of sophistication of countries’ exports “matters” for growth and development. This paper contributes to this literature by analysing two unexplored dimensions of export diversification: the degree of relatedness (similarity) and sophistication of new products in relation to existing ones. The objective of this paper is to understand the mechanisms through which firms are able to diversify to less related and more sophisticated activities. We do so using a unique dataset that links data on exports, innovation and firms’ characteristics at the firm level in Brazil. The main findings suggest that i) diversification occurs in very closely related activities, where firms have some core competences, ii) most diversification occurs in new products with lower level of sophistication than existing exports, iii) the degree of diversification and innovativeness of the production basket, and the position that the firm has developed in the domestic market appear to matter for diversification towards more or less distant products.

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Bibliographic Info

Paper provided by Department of Economics, University of Sussex in its series Working Paper Series with number 2611.

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Date of creation: Oct 2011
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Handle: RePEc:sus:susewp:2611

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Keywords: Diversification; Relatedness; Sophistication; Trade; Innovation; Brazil;

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References

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  1. Wacziarg, Romain & Imbs, Jean, 2000. "Stages of Diversification," Research Papers 1653, Stanford University, Graduate School of Business.
  2. Hausmann, Ricardo & Hwang, Jason & Rodrik, Dani, 2006. "What You Export Matters," CEPR Discussion Papers 5444, C.E.P.R. Discussion Papers.
  3. Haddad, Mona E. & Lim, Jamus Jerome & Saborowski, Christian, 2010. "Trade openness reduces growth volatility when countries are well diversified," Policy Research Working Paper Series 5222, The World Bank.
  4. Hausmann, Ricardo & Rodrik, Dani, 2002. "Economic Development as Self-Discovery," Working Paper Series rwp02-023, Harvard University, John F. Kennedy School of Government.
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  6. Frank Neffke & Martin Svensson Henning, 2008. "Revealed Relatedness: Mapping Industry Space," Papers in Evolutionary Economic Geography (PEEG) 0819, Utrecht University, Section of Economic Geography, revised Dec 2008.
  7. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
  8. Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
  9. Dierk Herzer & Nowak-Lehnmann Felicitas, 2006. "What does export diversification do for growth? An econometric analysis," Applied Economics, Taylor & Francis Journals, vol. 38(15), pages 1825-1838.
  10. Brian Aitken & Gordon H. Hanson & Ann E. Harrison, 1994. "Spillovers, Foreign Investment, and Export Behavior," NBER Working Papers 4967, National Bureau of Economic Research, Inc.
  11. Christian Volpe Martincus & Jerónimo Carballo, 2008. "Survival of New Exporters in Developing Countries: Does it Matter How They Diversify?," IDB Publications 9291, Inter-American Development Bank.
  12. Richard Newfarmer & William Shaw & Peter Walkenhorst, 2009. "Breaking Into New Markets," World Bank Publications, The World Bank, number 2616, October.
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  1. Export diversification
    by UDADISI in udadisi on 2012-03-09 14:34:00

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