The Power of Exports

52 Pages Posted: 20 Apr 2016  

William Easterly

New York University - Department of Economics

Ariell Reshef

University of Virginia; New York University (NYU) - Department of Economics

Julia M. Schwenkenberg

Rutgers, The State University of New Jersey - Rutgers University, Newark

Date Written: October 1, 2009

Abstract

The authors systematically document remarkably high degrees of concentration in manufacturing exports for a sample of 151 countries over a range of 3,000 products. For every country manufacturing exports are dominated by a few"big hits"which account for most of the export value and where the"hit"includes both finding the right product and finding the right market. Higher export volumes are associated with higher degrees of concentration, after controlling for the number of destinations a country penetrates. This further highlights the importance of big hits. The distribution of exports closely follows a power law, especially in the upper tail. These findings do not support a"picking winners"policy for export development; the power law characterization implies that the chance of picking a winner diminishes exponentially with the degree of success. Moreover, given the size of the economy, developing countries are more exposed to demand shocks than rich ones, which further lowers the benefits from trying to pick winners.

Keywords: Markets and Market Access, Economic Theory & Research, Access to Markets, Airports and Air Services, Tax Law

Suggested Citation

Easterly, William and Reshef, Ariell and Schwenkenberg, Julia M., The Power of Exports (October 1, 2009). World Bank Policy Research Working Paper Series, Vol. , pp. -, 2009. Available at SSRN: https://ssrn.com/abstract=1492561

William Easterly

New York University - Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States

Ariell Reshef

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

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

University of Virginia ( email )

1400 University Ave
Charlottesville, VA 22903
United States

Julia M. Schwenkenberg

Rutgers, The State University of New Jersey - Rutgers University, Newark ( email )

180 University Avenue
Newark, NJ 07102
United States

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