THE HETEROGENEOUS INFLUENCE OF EXPORT RELATEDNESS AND IMPORT RELATEDNESS ON COMPLEX PRODUCT DIVERSIFICATION

Xiaoyi Ding (), Ke Ren (), Hongyi Li and Tianle Yang ()
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Xiaoyi Ding: School of Economics, Zhejiang University of Technology, Hangzhou 310014, P. R. China
Ke Ren: Leeds Business School, Leeds Beckett University, Leeds LS1 3HB, UK
Hongyi Li: Business School, Chinese University of Hong Kong, Sha Tin, Hong Kong
Tianle Yang: School of Economics, Zhejiang University of Technology, Hangzhou 310014, P. R. China

The Singapore Economic Review (SER), 2025, vol. 70, issue 01, 103-124

Abstract: This study draws upon the product space framework to examine the effects of export relatedness and import relatedness on complex product diversification. We use a sample of data for approximately 100 countries from 2002 to 2019, which covers the periods before, during and after the 2008 global financial crisis. We find that countries are likely to maintain a comparative advantage in their current products and develop a comparative advantage in new complex products that are strongly related to their present export structure. By contrast, the relatedness between new products and imports has a negative effect on complex product diversification with the exception of countries in East Asia and the Pacific, but this effect is weaker than that of export relatedness. These effects also vary among countries with different income levels and geographical regions. In addition, we find that the effects of both export relatedness and import relatedness on complex product diversification decreased after the 2008 global financial crisis, which means that the process of diversification of new complex products from related exports or imports slowed down in the post-financial crisis world.

Keywords: Export relatedness; import relatedness; complex product diversification; financial crisis (search for similar items in EconPapers)
JEL-codes: F14 O14 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1142/S0217590824500498

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