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The power of exports

Author

Listed:
  • Easterly, William
  • Reshef, Ariell
  • Schwenkenberg, Julia

Abstract

The authors systematically document remarkably high degrees of concentration in manufacturing exports for a sample of 151 countries over a range of 3,000 products. For every country manufacturing exports are dominated by a few"big hits"which account for most of the export value and where the"hit"includes both finding the right product and finding the right market. Higher export volumes are associated with higher degrees of concentration, after controlling for the number of destinations a country penetrates. This further highlights the importance of big hits. The distribution of exports closely follows a power law, especially in the upper tail. These findings do not support a"picking winners"policy for export development; the power law characterization implies that the chance of picking a winner diminishes exponentially with the degree of success. Moreover, given the size of the economy, developing countries are more exposed to demand shocks than rich ones, which further lowers the benefits from trying to pick winners.

Suggested Citation

  • Easterly, William & Reshef, Ariell & Schwenkenberg, Julia, 2009. "The power of exports," Policy Research Working Paper Series 5081, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5081
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    Cited by:

    1. Roberto Basile & Aleksandra Parteka & Rosanna Pittiglio, 2015. "Export diversification and economic development: a dynamic spatial data analysis," Gecomplexity Discussion Paper Series 15, Action IS1104 "The EU in the new complex geography of economic systems: models, tools and policy evaluation", revised Dec 2015.
    2. Christian Henn & Chris Papageorgiou & Nicola Spatafora, 2013. "Export Quality in Developing Countries," IMF Working Papers 13/108, International Monetary Fund.
    3. Lord, Montague, 2015. "Regional Economic Integration in Central Asia and South Asia," MPRA Paper 66436, University Library of Munich, Germany.
    4. Mercedes Campi & Marco Due~nas & Le Li & Huabin Wu, 2018. "Diversification, economies of scope, and exports growth of Chinese firms," Papers 1801.02681, arXiv.org, revised Jan 2018.
    5. di Giovanni, Julian & Levchenko, Andrei A. & Rancière, Romain, 2011. "Power laws in firm size and openness to trade: Measurement and implications," Journal of International Economics, Elsevier, vol. 85(1), pages 42-52, September.
    6. Aleksandra Parteka & Massimo Tamberi, 2013. "What Determines Export Diversification in the Development Process? Empirical Assessment," The World Economy, Wiley Blackwell, vol. 36(6), pages 807-826, June.
    7. World Bank, 2010. "Bhutan Investment Climate Assessment Report : Vitalizing the Private Sector, Creating Jobs, Volume 2," World Bank Other Operational Studies 12872, The World Bank.
    8. Theresa Chaudhry & Muhammad Haseeb, 2014. "Exporters in Pakistan and Firms Who Do Not Export: What’s the Big Difference?," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 19(Special E), pages 207-246, September.
    9. Cadot, Olivier & Iacovone, Leonardo & Pierola, Martha Denisse & Rauch, Ferdinand, 2013. "Success and failure of African exporters," Journal of Development Economics, Elsevier, vol. 101(C), pages 284-296.
    10. Sufrauj, Shamnaaz & Schiavo, Stefano & Riccaboni, Massimo, 2014. "The Structure and Growth of World Trade, and the Role of Europe in the Global Economy," MPRA Paper 54122, University Library of Munich, Germany.
    11. Prema-chandra Athukorala & Swarnim Waglé, 2013. "Export Performance in Transition: The Case of Georgia," Departmental Working Papers 2013-02, The Australian National University, Arndt-Corden Department of Economics.
    12. Shamnaaz Sufrauj & Stefano Schiavo & Massimo Riccaboni, 2015. "Big hits, export concentration and volatility," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(2), pages 135-166, August.
    13. Massimo Riccaboni & Stefano Schiavo, 2012. "Stochastic Trade Networks," DEGIT Conference Papers c017_014, DEGIT, Dynamics, Economic Growth, and International Trade.
    14. Gnidchenko, A., 2014. "Improving the Methods for Estimating the Structure and the Basis of Export Potential through Export Diversification," Journal of the New Economic Association, New Economic Association, vol. 21(1), pages 83-109.
    15. Karsten Mau, 2016. "Export diversification and income differences reconsidered: The extensive product margin in theory and application," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(2), pages 351-381, May.
    16. Schwenkenberg Julia M., 2013. "Income Distribution and the Occupational Choices of Entrepreneurs," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(1), pages 55-80, November.
    17. Kaplan, David, 2012. "South African mining equipment and specialist services: Technological capacity, export performance and policy," Resources Policy, Elsevier, vol. 37(4), pages 425-433.
    18. Reis, Jose Guilherme & Taglioni, Daria, 2013. "Determinants of export growth at the extensive and intensive margins : evidence from product and firm-level data for Pakistan," Policy Research Working Paper Series 6341, The World Bank.
    19. World Bank, 2010. "Bhutan Investment Climate Assessment Report : Vitalizing the Private Sector, Creating Jobs, Volume 1. Summary Report," World Bank Other Operational Studies 12871, The World Bank.
    20. di Giovanni, Julian & Levchenko, Andrei A., 2013. "Firm entry, trade, and welfare in Zipf's world," Journal of International Economics, Elsevier, vol. 89(2), pages 283-296.
    21. Álvarez López, M.ª Elisa & Vega Crespo, Josefa, 2017. "La fortaleza competitiva de la economía española/The Competitive Strength of the Spanish Economy," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 35, pages 7-34, Enero.
    22. Matías Berthelon, 2011. "Chilean Export Performance: the Rol of Intensive and Extensive Margins," Working Papers Central Bank of Chile 615, Central Bank of Chile.
    23. Daniel Lederman & William F. Maloney, 2012. "Does What You Export Matter? In Search of Empirical Guidance for Industrial Policies," World Bank Publications, The World Bank, number 9371.

    More about this item

    Keywords

    Markets and Market Access; Economic Theory&Research; Access to Markets; Airports and Air Services; Tax Law;

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