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Export Diversification: How Much Does the Choice of the Trading Partner Matter?

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  • Julie Regolo

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

  • Julie Regolo, 2013. "Export Diversification: How Much Does the Choice of the Trading Partner Matter?," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 13072, Institut d'Economie et Econométrie, Université de Genève.
  • Handle: RePEc:gen:geneem:13072
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    References listed on IDEAS

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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. repec:eee:inteco:v:151:y:2017:i:c:p:26-47 is not listed on IDEAS
    3. repec:bla:afrdev:v:29:y:2017:i:2:p:139-154 is not listed on IDEAS
    4. 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.
    5. repec:bla:reviec:v:25:y:2017:i:3:p:427-446 is not listed on IDEAS
    6. 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.

    More about this item

    Keywords

    Export diversification; comparative advantage; trade costs; intra-industry trade; North- South trade;

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