What drives cross-country differences in export variety? A bilateral panel approach

Abstract

A worldwide event like the 2020 Coronavirus outbreak can only reinforce the interest in modelling trade diversification as a key factor in countries’ vulnerability to external shocks. This paper adopts a detailed relative framework to study the determinants of product-level export variety in a large bilateral panel of developing and developed economies (16,770 country pairs in the period 1988–2014). We find that country pairs characterized by large differentials in productivity and in the makeup of the labour force differ in export variety patterns. This result holds after controlling for other endowments and for trade costs. Further, productivity plays a significant role in the reduction of export variety dissimilarities between countries belonging to different income groups. Hence, without successful technological convergence the low-income economies will not be able to reduce their exposure to export risk.

What Have We Learned about the Effects of the COVID-19 Pandemic on Consumer Behavior?

“…As described in [5], the COVID-19 pandemic has encouraged countries to diversify their trade to avoid external shocks. Indeed, the volatility in oil prices that we saw at the start of the COVID-19 crisis negatively impacted the oil-based economies of several countries around the world.…”

Alternative Sources of the Gains from International Trade: Variety, Creative Destruction, and Markups

“…That is, firms retain some limited monopoly power in their unique product varieties so that prices are above marginal cost, but there is free entry of firms in the long run, so that markups just cover the fixed costs of entry and industry profits are zero. 1 A second additional source of gains from trade also comes from the monopolistic competition model, but in contrast with the first-generation models that had homogeneous firms (Krugman 1979(Krugman , 1980(Krugman , 1981Helpman and Krugman 1985), the second-generation model of monopolistic competition allows firms to be heterogeneous in their productivity levels (Melitz 2003;Chaney 2008). In this setting, international trade allows the most-productive firms to expand their sales through exports, while the least-productive firms are forced to exit because of competition with imports.…”

“…Wouldn't it be more efficient just to swap recipes?" 2 1 Research in international trade is nearly always done in a long-run general equilibrium setting because it is felt that short-run or partial equilibrium settings do not lend themselves to theories of the pattern of trade. Likewise, the gains from trade are usually evaluated in a long-run general equilibrium model, where allowing free entry in all industries eliminates the need to keep track of the distribution of industry profits throughout the economy.…”

Assessment of the Region's Foreign Trade Potential as a Source of Labor Productivity Growth Based on Structural Dynamic Analysis Commodity Flows

“…Значимость для экономики стран диверсификации экспорта с позиции снижения рисков от внешнеэкономической деятельности также доказана на примере европейских стран в период распространения коронавируса в труде Parteka A. [6]. Ряд исследователей обращают внимание, что в период ограничений особенно четко проявилась нарастающая тенденция последних лет повышения участия государства в регулировании внешней торговли (Allam Z.…”