Export take-offs and acceleration: Unpacking cross-sector linkages in the evolution of comparative advantage

Abstract

The transition into non-traditional export activities attracts important policy and academic attention. Using international trade data, we explore how alternative linkages relate to the takeoff and acceleration of export industries. Concretely, we run a horse-race among alternative Marshallian linkages across sectors: input-output relations, technology and labor. Technology has a predictive power depending on the specification used. We consistently find, however, that export takeoffs are more likely to occur in sectors that are upstream to already competitive export industries. Our findings, which are mostly driven by developing economies, are consistent with Albert Hirschman's 60-year-old view that the forces behind upstream linkages fueled the growth of new competitive industries in the developing world.

Education and the Evolution of Comparative Advantage

“…Third, education may permit actors to identify and take advantage of new disequilibrium opportunities (Schultz 1975). There is evidence that new industrial strengths develop where downstream industries already exist (Bahar et al 2019), which is consistent with changes in the organization of supply chains creating such disequilibrium opportunities.…”

“…Moreover, the role of college and especially primary attainment in overcoming familiarity appears much stronger once these corrections are made. Table 12 checks our results for robustness to corrections for neighborhood effects-spillovers of knowledge and supply chains to nearby countries (Bahar, Hausmann, and Hidalgo 2014;Bahar et al 2019). We capture these effects by correcting for the weighted average familiarity in 1995 of every other country with the product in question-where the weight is simply the inverse of that country's geographic distance from country , and an analogous measure of neighbors' RCA in 1995.…”

Education and the Evolution of Comparative Advantage

“…Third, education may permit actors to identify and take advantage of new disequilibrium opportunities (Schultz 1975). There is evidence that new industrial strengths develop where downstream industries already exist (Bahar et al 2019), which is consistent with changes in the organization of supply chains creating such disequilibrium opportunities. These results do not mean that education is unimportant for developing countries seeking to move from peripheral products to complex, core products.…”

“…Table 12 checks our results for robustness to corrections for neighborhood effects-spillovers of knowledge and supply chains to nearby countries (Bahar, Hausmann, and Hidalgo 2014;Bahar et al 2019). We capture these effects by correcting for the weighted average familiarity in 1995 of every other country with the product in question-where the weight is simply the inverse of that country's geographic distance from country 𝑐, and an analogous measure of neighbors' RCA in 1995.…”

“…Industries relying on overlapping capabilities (or inputs) are said to be related (Hidalgo et al 2018). Path dependency means a tendency to develop new industries that are related to existing industries (Bahar et al 2019). More complex products require more capabilities.…”