Relatedness and Diversification in the EU-27 and ENP countries

Ron Boschma () and Gianluca Capone

No 1407, Papers in Evolutionary Economic Geography (PEEG) from Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography

Abstract: This paper analyzes the process of industrial diversification in the EU-27 and ENP countries in the period 1995-2010 by means of world trade data derived from the BACI database (elaborated UN Comtrade data). Our results show that in both the EU-27 and the ENP countries, the evolution of the export mix is strongly path-dependent: countries tend to keep a comparative advantage in products that are strongly related to their current productive structure, and they also diversify in nearby products. However, this effect is much stronger for ENP countries, signalling their lower capabilities to diversify in products that are not very near to their productive structure. We also show that the future export structures of countries are affected by their imports: both the EU-27 and ENP countries keep a comparative advantage in products that are strongly related to their imports, but only EU countries show a strong capability to diversify in new products from related import sectors. Our results also hold when controlling for geographical and institutional proximity.

Keywords: diversification; relatedness; European Neighborhood Policy; trade (search for similar items in EconPapers)
JEL-codes: F19 O14 O33 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2014-02, Revised 2014-02
New Economics Papers: this item is included in nep-eur, nep-geo, nep-int and nep-sog
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:egu:wpaper:1407

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