How You Export Matters: The Disassortative Structure of International Trade

40 Pages Posted: 19 Sep 2016

See all articles by Andreas Joseph

Andreas Joseph

European Central Bank (ECB)

Chiara Osbat

European Central Bank (ECB)

Date Written: September 16, 2016

Abstract

The local network structure of international trade relations offers a new dimension for understanding a country’s competitive position vis-á-vis its trade partners and competitors, supporting economic policy analysis. We introduce two network measures that can be used to analyse comparative advantage and price competitiveness, called relative export density and export price assortativity, respectively. The novelty of these measures is that they consider the embedding of a country into its local trade environment. They are computed based on unit values and sector concentrations at a highly granular level and they help to uncover general patterns of the global organisation of international trade. Countries have a strong tendency to arrange their exports to form local monopolies by focusing on products and markets, usually - but not exclusively - where they have a price advantage. Price (dis)assortativity turns out to be an important factor for export growth, even after controlling for a large set of macroeconomic and structural determinants. This effect is particularly strong for catching-up CESEE countries, with potential implications for industrial policy. The relationship between the two export assortativity metrics for different groups of countries and for varying technological content of exports indicates a tipping point in a country’s development from price-driven competition to non-price factors.

Keywords: Export growth, Comparative advantage, World trade network, Export sophistication

JEL Classification: F14, F63, D85

Suggested Citation

Joseph, Andreas and Osbat, Chiara, How You Export Matters: The Disassortative Structure of International Trade (September 16, 2016). ECB Working Paper No. 1958, Available at SSRN: https://ssrn.com/abstract=2839836

Andreas Joseph (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Chiara Osbat

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49 69 1344 6821 (Phone)
+49 69 1344 6000 (Fax)

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