 Trade costs and the composition of developing countries' exportsSalamat Ali and Chris Milner Review of Development Economics, 2022, vol. 26, issue 4, 1971-1996 Abstract: This study investigates whether trade costs have a systematic influence on the composition of developing countries' exports, one which is distinct from their effect on the volume of trade. It uses the World Bank's bilateral trade cost dataset and incorporates trade flows for a large set of developing countries. The identification strategy exploits the variation in trade costs across countries and the differences in trade cost sensitivity across industries and employs a cost shifter as an instrument to overcome the potential endogeneity of trade costs. The paper finds that the export composition of developing economies is fashioned by trade costs, with higher trade costs lowering (other things constant) the share of an industry's exports in the country's total exports more for more trade‐cost‐sensitive industries. The policy implication is clear: reducing trade costs encourages a shift in the composition of developing country exports in favor of relatively more trade‐cost‐intensive exports, which tend also to be more technologically advanced. Date: 2022 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:rdevec:v:26:y:2022:i:4:p:1971-1996 Ordering information: This journal article can be ordered from Access Statistics for this article Review of Development Economics is currently edited by E. Kwan Choi More articles in Review of Development Economics from Wiley Blackwell |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.