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Export diversification: How much does the choice of the trading partner matter?

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  • Regolo, Julie

Abstract

This paper studies how a country's export diversification varies across destination markets. It develops an extension of the Romalis (2004) model which yields two testable predictions. According to the first, exports between similarly endowed countries (“South–South” and “North–North”) are more diversified than exports between differently endowed countries (“South–North” and “North–South”). The second implication is that, for given countries' production patterns, low bilateral trade costs lead to greater export diversification. These predictions find empirical support in a panel of 102 trade partners and 4998 HS-6 industries over the period 1995–2007. Results show that similarities between trading partners in physical capital, land and human capital endowments per worker are associated with more diversified bilateral exports. Exports are also more diversified when bilateral trade costs are relatively low.

Suggested Citation

  • Regolo, Julie, 2013. "Export diversification: How much does the choice of the trading partner matter?," Journal of International Economics, Elsevier, vol. 91(2), pages 329-342.
  • Handle: RePEc:eee:inecon:v:91:y:2013:i:2:p:329-342 DOI: 10.1016/j.jinteco.2013.07.004
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    Cited by:

    1. Rotunno, Lorenzo & Vezina, Pierre-Louis & Ito, Tadashi, 2015. "Heckscher-Ohlin : evidence from virtual trade in value added," IDE Discussion Papers 549, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    2. Demir, Firat, 2016. "Effects of FDI Flows on Institutional Development: Does It Matter Where the Investors are from?," World Development, Elsevier, vol. 78(C), pages 341-359.
    3. repec:eee:inteco:v:151:y:2017:i:c:p:26-47 is not listed on IDEAS
    4. repec:bla:afrdev:v:29:y:2017:i:2:p:139-154 is not listed on IDEAS
    5. Alessia Amighini & Marco Sanfilippo, 2013. "Impact of South-South FDI and trade on the export upgrading of African economies," RSCAS Working Papers 2013/75, European University Institute.
    6. Amighini, Alessia & Sanfilippo, Marco, 2014. "Impact of South–South FDI and Trade on the Export Upgrading of African Economies," World Development, Elsevier, vol. 64(C), pages 1-17.

    More about this item

    Keywords

    Export diversification; Comparative advantage; Trade costs; Intra-industry trade; North–South trade;

    JEL classification:

    • F1 - International Economics - - Trade

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