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The surprising instability of export specializations

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  • Daruich, Diego
  • Easterly, William
  • Reshef, Ariell

Abstract

We study the instability of hyper-specialization of exports at the 4-digit level in 1998–2010. (1) Specializations are surprisingly un-stable. Export ranks are not persistent, and new top products and destinations replace old ones. Measurement error is unlikely to be the main or only determinant of this pattern. (2) Source country factors are not the main explanation of this instability. Only 16–20% of variation in export growth is accounted for by source country plus source country-product factors that do not vary across destinations. The high share of idiosyncratic variance (source-product-destination residual) of 41–55%, indicates the difficulty to predict export success using source country characteristics. While we are cautious in interpreting factors that are jointly determined in global general equilibrium, our results suggest that destination and product-specific factors importantly matter at least as much as source country factors.

Suggested Citation

  • Daruich, Diego & Easterly, William & Reshef, Ariell, 2019. "The surprising instability of export specializations," Journal of Development Economics, Elsevier, vol. 137(C), pages 36-65.
  • Handle: RePEc:eee:deveco:v:137:y:2019:i:c:p:36-65
    DOI: 10.1016/j.jdeveco.2018.10.009
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    Cited by:

    1. Peter Mihalyi, 2017. "Learning, as a wonder weapon of endogenous growth?," IEHAS Discussion Papers 1727, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    2. repec:eee:inteco:v:151:y:2017:i:c:p:26-47 is not listed on IDEAS
    3. William R Kerr, 2018. "Heterogeneous Technology Diffusion and Ricardian Trade Patterns," World Bank Economic Review, World Bank Group, vol. 32(1), pages 163-182.
    4. repec:usg:auswrt:2017:68:01:63-82 is not listed on IDEAS

    More about this item

    Keywords

    Power law; Granularity; Export growth; Industrial policy;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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