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Neighbors and the Evolution of the Comparative Advantage of Nations: Evidence of International Knowledge Diffusion?

Listed author(s):
  • Dany Bahar

    (Center for International Development at Harvard University)

  • Ricardo Hausmann

    ()

    (Center for International Development at Harvard University)

  • Cesar A. Hidalgo

The literature on knowledge diffusion shows that it 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, having a neighbor with comparative advantage in them is associated with a growth of exports that is higher by 1.5 percent per annum. While these results could be driven by a common third factor that escapes our controls, they are what would be expected from the localized character of knowledge diffusion.

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Paper provided by Center for International Development at Harvard University in its series CID Working Papers with number 235.

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Date of creation: Apr 2012
Handle: RePEc:cid:wpfacu:235
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