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Explaining the Diversification Path of Exporters in Brazil: How Similar and Sophisticated are New Products?

Author

Listed:
  • Xavier Cirera

    (IDS and CARIS, University of Sussex)

  • Anabel Marin

    (SPRU, University of Sussex and Conicet, Argentina)

  • Ricardo Markwald

    (FUNCEX, Brazil)

Abstract

A stylised fact of the economic literature suggests that export diversification is good for economic growth and is associated with economic development. In addition, there is evidence suggesting that the level of sophistication of countries’ exports “matters” for growth and development. This paper contributes to this literature by analysing two unexplored dimensions of export diversification: the degree of relatedness (similarity) and sophistication of new products in relation to existing ones. The objective of this paper is to understand the mechanisms through which firms are able to diversify to less related and more sophisticated activities. We do so using a unique dataset that links data on exports, innovation and firms’ characteristics at the firm level in Brazil. The main findings suggest that i) diversification occurs in very closely related activities, where firms have some core competences, ii) most diversification occurs in new products with lower level of sophistication than existing exports, iii) the degree of diversification and innovativeness of the production basket, and the position that the firm has developed in the domestic market appear to matter for diversification towards more or less distant products.

Suggested Citation

  • Xavier Cirera & Anabel Marin & Ricardo Markwald, 2011. "Explaining the Diversification Path of Exporters in Brazil: How Similar and Sophisticated are New Products?," Working Paper Series 2611, Department of Economics, University of Sussex Business School.
    • Handle: RePEc:sus:susewp:2611
    as

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    File URL: http://www.sussex.ac.uk/economics/documents/wps26-2011-cirera.pdf
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    References listed on IDEAS

    as
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Export diversification
      by UDADISI in udadisi on 2012-03-09 20:34:00

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    More about this item

    Keywords

    Diversification; Relatedness; Sophistication; Trade; Innovation; Brazil;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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