Trade De-Specialization: Dynamics and Determinants

Export baskets reflect broader processes of structural change and economic development. While most studies emphasize the emergence of new export specializations, this paper examines an equally important yet neglected pattern—trade exits, defined as sustained declines in revealed comparative advantage. Using a large sample of economies from 2000 to 2019, we show that trade exits are widespread, with more than one-third of trade specializations disappearing during this period. We document substantial heterogeneity across economies and sectors and identify both product- and economy-level drivers of exits. We pay particular attention to the role of product relatedness and to the growing participation of the People’s Republic of China in the global economy—the so-called “China shock”—in shaping exit dynamics, especially in industrial products. Our findings provide new insights into the dynamics of structural transformation in the global economy, with a focus on Asian Development Bank developing economies.