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Being at the Core: Firm product Specialisation

Filippo Bontadini, Mercedes Campi and Marcos Dueñas
Additional contact information
Filippo Bontadini: LUISS University/University of Sussex
Marcos Dueñas: IMT

No 239, Working Papers from Red Nacional de Investigadores en Economía (RedNIE)

Abstract: We propose a novel measure to investigate firms’ product specialisation: product coreness, that captures the centrality of exported products within the firm’s export basket. We study product coreness using firm-product level data between 2018 and 2020 for Colombia, Ecuador, and Peru. Three main findings emerge from our analysis. First, the composition of firms’ export baskets changes relatively littlefrom one year to the other, and products far from the firm’s core competencies, with low coreness, are more likely to be dropped. Second, higher coreness is associated with larger export flows at the firm level. Third, such firm-level patterns also haveimplications at the aggregate level: products that are, on average, exported with higher coreness have higher export flows at the country level, which holds across all levels of product complexity. Therefore, the paper shows that how closely a product fits within a firm’s capabilities is important for economic performance at both the firm and country level. We explore these issues within an econometric framework, finding robust evidence both across our three countries and for each country separately.

Keywords: International Trade; Diversification; Capabilities; COVID–19 (search for similar items in EconPapers)
JEL-codes: F14 L25 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2023-05
New Economics Papers: this item is included in nep-bec, nep-des, nep-int and nep-tid
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https://rednie.eco.unc.edu.ar/files/DT/239.pdf (application/pdf)

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