Trade sophistication in developing countries: Does export destination matter?

Document Type

Article

Publication Date

1-1-2019

Abstract

We investigate whether exports to developed economies stimulate export sophistication (represented by UNCTAD's index of export similarity) in developing countries. Results from fixed-effects estimations suggest that exporting to developed economies enhances the sophistication of exports in the exporting country but there are diminishing returns to this effect. We also find non-linear effects from FDI and income on export sophistication with the effect of income exhibiting diminishing returns which suggests that the gains from exporting to developed economies are higher for lower-income countries; i.e., as income increases, the gains taper off. We discuss the policy implications of these results.

Publication Title

Journal of Policy Modeling

Volume

41

Issue

1

First Page

39

Last Page

51

Digital Object Identifier (DOI)

10.1016/j.jpolmod.2018.09.003

ISSN

01618938

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