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Networks and the Dynamics of Firms' Export Portfolio: Evidence for Mexico

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  • Juan Lucio
  • Raúl Mínguez
  • Asier Minondo
  • Francisco Requena

Abstract

In 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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Suggested Citation

  • Juan Lucio & Raúl Mínguez & Asier Minondo & Francisco Requena, 2016. "Networks and the Dynamics of Firms' Export Portfolio: Evidence for Mexico," The World Economy, Wiley Blackwell, vol. 39(5), pages 708-736, May.
  • Handle: RePEc:bla:worlde:v:39:y:2016:i:5:p:708-736
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    Cited by:

    1. Juan de Lucio & Raúl Mínguez & Asier Minondo & Francisco Requena, 2015. "Networks and the dynamics of firms’ export portfolio," Working Papers 1513, Banco de España;Working Papers Homepage.

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    JEL classification:

    • F1 - International Economics - - Trade

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