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Neighbors and the evolution of the comparative advantage of nations: Evidence of international knowledge diffusion?

  • Bahar, Dany
  • Hausmann, Ricardo
  • Hidalgo, Cesar A.

The literature on knowledge diffusion shows that knowledge decays strongly with distance. In this paper we document that the probability that a product is added to a country's export basket is, on average, 65% larger if a neighboring country is a successful exporter of that same product. For existing products, growth of exports in a country is 1.5% higher per annum if it has a neighbor with comparative advantage in these products. While these results could be driven by a common third factor that escapes our controls, they align with our expectations of the localized character of knowledge diffusion.

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Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 92 (2014)
Issue (Month): 1 ()
Pages: 111-123

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Handle: RePEc:eee:inecon:v:92:y:2014:i:1:p:111-123
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505552

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