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Export Variety and Country Productivity

Robert Feenstra () and Hiau Looi Kee ()

No 10830, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper provides evidence on monopolistic competition models with endogenous technology by studying the effects of sectoral export variety on country productivity. The effects are estimated in a translog GDP function system based on data for 34 countries from 1982 to 1997. Country productivity is constructed and export variety is shown to be significant. Instruments such as tariffs, transport costs, and distance are shown to affect country productivity through export variety, and only through this channel. Overall, while export variety accounts for only 2% of cross-country productivity differences, it explains 13% of within-country productivity growth. A 10% increase in the export variety of all industries leads to a 1.3% increase in country productivity, while a 10 percentage point increase in tariffs facing an exporting country leads to a 2% fall in country productivity.

JEL-codes: F12 F14 (search for similar items in EconPapers)
Date: 2004-10
Note: ITI PR
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Published as Feenstra, Robert C. and Hiau Looi Kee. “Export Variety and Country Productivity: Estimating the Monopolistic Competition Model with Endogenous Productivity.” Journal of International Economics (March 2008): 500-514.

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