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Relative Productivity, Country Size and Export Diversification

Abstract

This paper analyses the effects of productivity and country size on the extent of trade structure diversification. Using a testable version of the Ricardian model, we show that relative export variety is an outcome of two forces: a relative productivity change (technological progress) and a relative country size change (labour force growth). The model predictions are validated empirically using product-level trade data for a sample of 132 countries (1988–2014), including 53 low-income countries. We find a robust positive relationship between export variety and the countries’ relative productivity, as well as a negative relationship between export variety and the expansion of foreign economies (i.e., the growth of the RoW). The effect of technology differences on export variety is driving diversification especially at the beginning of the development process. The results are robust to changes in the measurement of export variety (also in terms of economic complexity), in the set of control variables, or in the estimation methods.

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Details

Category:
Articles
Type:
artykuły w czasopismach
Published in:
Structural Change and Economic Dynamics no. 57, pages 28 - 44,
ISSN: 0954-349X
Language:
English
Publication year:
2021
Bibliographic description:
Cieślik A., Parteka A.: Relative Productivity, Country Size and Export Diversification// Structural Change and Economic Dynamics -Vol. 57, (2021), s.28-44
DOI:
Digital Object Identifier (open in new tab) 10.1016/j.strueco.2021.01.002
Verified by:
Gdańsk University of Technology

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