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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. Tadashi Ito & Lorenzo Rotunno & Pierre-Louis Vézina, 2017. "Heckscher–Ohlin: Evidence from Virtual Trade in Value Added," Review of International Economics, Wiley Blackwell, vol. 25(3), pages 427-446, August.
    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. Regolo, Julie, 2017. "Manufacturing export diversification and regionalization of trade: Which destinations for newly exported goods?," International Economics, Elsevier, vol. 151(C), pages 26-47.
    4. Laurent Didier, 2017. "South-South Trade and Geographical Diversification of Intra-SSA Trade: Evidence from BRICs," African Development Review, African Development Bank, vol. 29(2), pages 139-154, June.
    5. Roberto Basile & Aleksandra Parteka & Rosanna Pittiglio, 2018. "Export diversification and economic development: A dynamic spatial data analysis," Review of International Economics, Wiley Blackwell, vol. 26(3), pages 634-650, August.
    6. -, 2018. "Trade integration and export diversification: El Salvador’s trade with the United States and Central America," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    7. 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.
    8. Josh Ederington & Mihai Paraschiv & Maurizio Zanardi, 2018. "The Short and Long-Run Effects of International Environmental Agreements on Trade," Working Papers 242514732, Lancaster University Management School, Economics Department.
    9. Ignacio del Rosal, 2019. "Export Diversification And Export Performance By Destination Country," Bulletin of Economic Research, Wiley Blackwell, vol. 71(1), pages 58-74, January.
    10. Stender, Frederik & Berger, Axel & Brandi, Clara & Schwab, Jakob, 2020. "The trade effects of the economic partnership agreements between the European Union and the African, Caribbean and Pacific group of states: Early empirical insights from panel data," Discussion Papers 7/2020, German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE).
    11. Le, Thai-Ha & Nguyen, Canh Phuc & Su, Thanh Dinh & Tran-Nam, Binh, 2020. "The Kuznets curve for export diversification and income inequality: Evidence from a global sample," Economic Analysis and Policy, Elsevier, vol. 65(C), pages 21-39.
    12. Omar S. Dahi & Firat Demir, 2017. "South–South And North–South Economic Exchanges: Does It Matter Who Is Exchanging What And With Whom?," Journal of Economic Surveys, Wiley Blackwell, vol. 31(5), pages 1449-1486, December.
    13. Ignacio Rosal, 2018. "Power laws in EU country exports," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 45(2), pages 311-337, May.
    14. Alain McLaren & Meysut Saygili & Miho Shirotori, 2018. "Revealed Factor Intensity of Products: Insights from a New Database," UNCTAD Blue Series Papers 81, United Nations Conference on Trade and Development.

    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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