On the evolution of comparative advantage: Path-dependent versus path-defying changes

Nicola Coniglio, Davide Vurchio, Nicola Cantore and Michele Clara

Journal of International Economics, 2021, vol. 133, issue C

Abstract: A country’s specialization evolves over time in a dynamic process, with shifts in comparative advantages, resulting in new products being added to the country’s export basket. According to the renowned Product Space (PS) framework (Hausmann and Klinger, 2007; Hidalgo et al., 2007), this dynamic process is characterized by strong path dependence, as a country’s current production capabilities (technologies, production factors, institutions, etc.) determine what a country produces today, but also limits what it can produce tomorrow. We use a novel methodology to explore whether the patterns of specialization of a large sample of countries for the period 1995–2015 correspond to the predictions of the PS framework. Despite finding evidence of path dependence, our analysis also finds that a significant number of new products later added to countries’ export baskets were unrelated to their initial specialization pattern. We shed light on the determinants of these path-dependent changes in countries’ export baskets and show that economic growth is weaker in countries with a higher degree of path dependence.

Keywords: Path dependence; Product space; Trade specialization; Industrial policy; Diversification (search for similar items in EconPapers)
JEL-codes: F1 O1 O3 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Related works:
Working Paper: On the evolution of comparative advantage: path-dependent versus path-defying changes (2018)
Working Paper: On the evolution of comparative advantage: path-dependent versus path-defying changes (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:133:y:2021:i:c:s0022199621001021

DOI: 10.1016/j.jinteco.2021.103522

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