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The surprising instability of export specializations

Author

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  • Daruich, Diego
  • Easterly, William
  • Reshef, Ariell
Abstract
We study the instability of hyper-specialization of exports at the 4-digit level in 1998–2010. (1) Specializations are surprisingly un-stable. Export ranks are not persistent, and new top products and destinations replace old ones. Measurement error is unlikely to be the main or only determinant of this pattern. (2) Source country factors are not the main explanation of this instability. Only 16–20% of variation in export growth is accounted for by source country plus source country-product factors that do not vary across destinations. The high share of idiosyncratic variance (source-product-destination residual) of 41–55%, indicates the difficulty to predict export success using source country characteristics. While we are cautious in interpreting factors that are jointly determined in global general equilibrium, our results suggest that destination and product-specific factors importantly matter at least as much as source country factors.

Suggested Citation

  • Daruich, Diego & Easterly, William & Reshef, Ariell, 2019. "The surprising instability of export specializations," Journal of Development Economics, Elsevier, vol. 137(C), pages 36-65.
    • Handle: RePEc:eee:deveco:v:137:y:2019:i:c:p:36-65
    DOI: 10.1016/j.jdeveco.2018.10.009
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    3. Jaud, Melise & Cadot, Olivier & Disdier, Anne-Célia & Suwa-Eisenmann, Akiko, 2024. "Big hits in export growth," Journal of Development Economics, Elsevier, vol. 170(C).
    4. William R Kerr, 2018. "Heterogeneous Technology Diffusion and Ricardian Trade Patterns," The World Bank Economic Review, World Bank, vol. 32(1), pages 163-182.
    5. Marlene Amstad & Beatrice Weder di Mauro, 2017. "Long-run effects of exchange rate appreciation: Another puzzle?," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 68(01), pages 63-82, December.
    6. Luciana Juvenal, 2020. "Terms-of-Trade Shocks are Not all Alike," IMF Working Papers 2020/280, International Monetary Fund.
    7. Bolhuis, Marijn, 2019. "Catch-Up Growth and Inter-Industry Productivity Spillovers," MPRA Paper 94730, University Library of Munich, Germany.
    8. Hua Zhou & Jiachen Fan & Xue Yang & Kaifeng Duan, 2023. "Food Export Stability, Political Ties, and Land Resources," Land, MDPI, vol. 12(10), pages 1-20, September.
    9. Mora, Jesse & Olabisi, Michael, 2023. "Economic development and export diversification: The role of trade costs," International Economics, Elsevier, vol. 173(C), pages 102-118.
    10. Hua Zhou & Jiachen Fan, 2023. "Export structure, import demand elasticity and export stability," The World Economy, Wiley Blackwell, vol. 46(3), pages 758-790, March.
    11. Dingel, Jonathan & Tintelnot, Felix, 2020. "Spatial Economics for Granular Settings," CEPR Discussion Papers 14819, C.E.P.R. Discussion Papers.
    12. Alongkorn Tanasritunyakul, 2023. "Export survival for Thailand after the COVID-19 pandemic," Discussion Papers 20230809, Thammasat University, Faculty of Economics, revised Oct 2023.
    13. Lili Huang & Qingyi Gao & Jiachen Fan & Jingwen Zhu & Zhenmu Hong, 2024. "Export stability and adolescent fertility rate," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(3), pages 1675-1706, April.
    14. Juan de Lucio & Raúl Mínguez & Asier Minondo & Francisco Requena, 2018. "How top exporters compete? Evidence from Spain," Economics and Business Letters, Oviedo University Press, vol. 7(2), pages 55-61.
    15. Asier Minondo, 2020. "Export revenue and quality: Firm‐level evidence from developing countries," Review of Development Economics, Wiley Blackwell, vol. 24(2), pages 471-484, May.

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    More about this item

    Keywords

    Power law; Granularity; Export growth; Industrial policy;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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