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The Surprising Instability of Export Specializations

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  • Diego Daruich
  • William Easterly
  • Ariell Reshef

Abstract

We study the instability of hyper-specialization of exports. We have two main findings. (1) Specializations are surprisingly unstable: Export ranks are not persistent, and new top products and destinations replace old ones. Measurement error is unlikely to be the main or only determinant of this pattern. (2) Source-country factors are not the main explanation of this instability: Only 20% of the variation in export growth can be explained by variation in comparative advantage (source-by-product factors), while another 20% of the variation in export growth can be explained by variation in bilateral (source-by-destination) factors. The high share of product, destination, and product-by-destination factors, diminishes the emphasis on the nations where the exports originate. The high share of idiosyncratic variance (residual at the source-product-destination level of variation) of about 30%, also indicates the difficulty to predict export success using source country characteristics. These findings suggest that export performance depends, to a greater extent than previously appreciated, on forces that are outside the realm of national export promotion and industrial policies.

Suggested Citation

  • Diego Daruich & William Easterly & Ariell Reshef, 2016. "The Surprising Instability of Export Specializations," NBER Working Papers 22869, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:22869
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    Cited by:

    1. Peter Mihalyi, 2017. "Learning, as a wonder weapon of endogenous growth?," IEHAS Discussion Papers 1727, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    2. repec:eee:inteco:v:151:y:2017:i:c:p:26-47 is not listed on IDEAS
    3. William R Kerr, 2018. "Heterogeneous Technology Diffusion and Ricardian Trade Patterns," World Bank Economic Review, World Bank Group, vol. 32(1), pages 163-182.
    4. repec:usg:auswrt:2017:68:01:63-82 is not listed on IDEAS

    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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