Export variety and country productivity
By: Robert Feenstra and Hiau Looi Kee.
Contributors: Kee, Hiau Looi.; World Bank.
Series: Policy research working paper ;; 3412; Policy research working papers (Online) ;; 3412.
Publisher: World Bank
Published: 2004
Place of publication: [Washington, D.C
Language: eng
Format: Electronic resource
Subjects: Product differentiation -- Case studies.; Industrial productivity -- Case studies.; Exports -- Case studies.; International trade -- Case studies.
Genres: Case studies.
Description: "Feenstra and Kee study the link between export product variety and country productivity based on data from 34 industrial and developing countries, from 1982 to 1997.  They measure export product variety by the share of U.S. imports on the set of goods exported by each sampled country relative to the world.  It is a theoretically sound index which is consistent with within-country GDP maximization, as well as cross-country comparison.  The authors construct country productivity based on relative endowments and product variety.  Increases in output product variety improve country productivity as the new mix of output may better use resources of the economy and improve allocative efficiency.  Such effects depend on the elasticity of substitution in production between the different varieties.  The more different the varieties are in terms of production, the more efficient it is to use the endowments of the economy when a new variety is available, which leads to productivity gains.  In addition, as suggested in the literature, export product variety depends on trade costs, such as tariffs, distance, and transport costs.  Such trade cost variables are used as instruments to help the authors identify the effects of export variety on country productivity.  Empirical evidence supports their hypothesis.  Overall, while export variety accounts for only 2 percent of cross-country productivity differences, it explains 13 percent of within-country productivity growth.  A 10 percent increase in the export variety of all industries leads to a 1.3 percent increase in country productivity, while a 10 percentage point increase in tariffs facing an exporting country leads to a 2 percent fall in country productivity.  This paper a product of the Trade Team, Development Research Group is part of a larger effort in the group to study the link between trade and productivity"--World Bank web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 9/23/2004.
Also available in print.
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Mode of access: World Wide Web.