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What You Exported Matters: Persistence in Productive Capabilities across Two Eras of Globalization

Isabella M Weber, Gregor Semieniuk, Tom Westland and Junshang Liang
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Isabella M Weber: Department of Economics and Political Economy Research Institute, University of Massachusetts Amherst
Junshang Liang: Department of Economics, University of Massachusetts Amherst

UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: Does what you exported matter? We build a new global commodity-level export database for the previous era of globalization and find persistence in productive capabilities proxied by economic complexity, export diversification, and sophistication across a century. We also show that productive capabilities at the turn of the 20th century are a powerful predictor of today’s income levels. We demonstrate that our results are not driven by persistence in geography or institutions. The persistence mechanism is the complementarity between past and future productive capabilities with one important qualification, the persistent negative effect of European overseas colonization. We also study shocks that undermined persistence, confirm the resource curse hypothesis for the long run and find a positive but slow effect of democratization.

JEL-codes: F14 F63 N10 O10 O50 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-his, nep-int, nep-isf and nep-pke
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