The Surprising Instability of Export Specializations

71 Pages Posted: 28 Nov 2016 Last revised: 28 Jun 2023

See all articles by Diego Daruich

Diego Daruich

New York University (NYU) - Department of Economics

William Easterly

New York University - Department of Economics

Ariell Reshef

Paris School of Economics (PSE); Université Paris I Panthéon-Sorbonne - CES/CNRS; Centre d'Etudes Prospectives et d'Info. Internationales (CEPII)

Date Written: November 2016

Abstract

We study the instability of hyper-specialization of exports. We have two main findings. (1) Specializations are surprisingly unstable: 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 20% of the variation in export growth can be explained by variation in comparative advantage (source-by-product factors), while another 20% of the variation in export growth can be explained by variation in bilateral (source-by-destination) factors. The high share of product, destination, and product-by-destination factors, diminishes the emphasis on the nations where the exports originate. The high share of idiosyncratic variance (residual at the source-product-destination level of variation) of about 30%, also indicates the difficulty to predict export success using source country characteristics. These findings suggest that export performance depends, to a greater extent than previously appreciated, on forces that are outside the realm of national export promotion and industrial policies.

Suggested Citation

Daruich, Diego and Easterly, William and Reshef, Ariell, The Surprising Instability of Export Specializations (November 2016). NBER Working Paper No. w22869, Available at SSRN: https://ssrn.com/abstract=2876434

Diego Daruich (Contact Author)

New York University (NYU) - Department of Economics ( email )

269 Mercer Street, 7th Floor
New York, NY 10011
United States

William Easterly

New York University - Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States

Ariell Reshef

Paris School of Economics (PSE) ( email )

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Paris, 75014 75014
France

Université Paris I Panthéon-Sorbonne - CES/CNRS ( email )

106 bv de l'Hôpital
Paris, 75013
France

Centre d'Etudes Prospectives et d'Info. Internationales (CEPII) ( email )

9 rue Georges Pitard
Paris Cedex 15, F-75015
France

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