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

  • Bahar, Dany

    (Harvard University)

  • Hausmann, Ricardo

    (Harvard University)

  • Hidalgo, Cesar A.

    (MIT)

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 Harvard University, John F. Kennedy School of Government in its series Working Paper Series with number rwp13-025.

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Date of creation: Aug 2013
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Handle: RePEc:ecl:harjfk:rwp13-025
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