Countries differ in the diversification of their exports and products differ in the number of countries that export them -their ubiquity.We document a new stylized fact in the global pattern of exports: a relationship between the diversification of a country 's exports and the ubiquity of its products. We argue that this is not implied by current theories of international trade and show that it is not a consequence of the heterogeneity in the level of diversification of countries or of the heterogeneity in the ubiquityof products. We account for this by constructing a model that assumes that each product requires a large number of non-tradable inputs, or capabilities, and that a country can only make the products for which it has all the requisite capabilities. Products differ in the number and specific nature of the capabilities they require, as countries differ in the number/nature of the capabilities they have. Products that require more capabilities are accessible to fewer countries (are less ubiquitous), while countries that have more capabilities have what is required to make more products (are more diversified). Our model implies that the return to the accumulation of new capabilities increases exponentially with the number of capabilities that a country has and that this convexity increases when either the total number of capabilities that exist in the world increases or the average complexity of products (the number of capabilities they require) increases. This defines a "quiescence trap" in which countries with few capabilities have negligible returns to the accumulation of new capabilities , while countrieswith many capabilities experience large returns to the accumulation of additional capabilities . We calibrate the model to three different sets and show that it reproduces the empirically observed distributions. We conclude that in our world the quiescence trap is strong .
Much of the analysis of economic growth has focused on the study of aggregate output. Here, we deviate from this tradition and look instead at the structure of output embodied in the network connecting countries to the products that they export.We characterize this network using four structural features: the negative relationship between the diversification of a country and the average ubiquity of its exports, and the non-normal distributions for product ubiquity, country diversification and product co-export. We model the structure of the network by assuming that products require a large number of non-tradable inputs, or capabilities, and that countries differ in the completeness of the set of capabilities they have. We solve the model assuming that the probability that a country has a capability and that a product requires a capability are constant and calibrate it to the data to find that it accounts well for all of the network features except for the heterogeneity in the distribution of country diversification. In the light of the model, this is evidence of a large heterogeneity in the distribution of capabilities across countries. Finally, we show that the model implies that the increase in diversification that is expected from the accumulation of a small number of capabilities is small for countries that have a few of them and large for those with many. This implies that the forces that help drive divergence in product diversity increase with the complexity of the global economy when capabilities travel poorly .
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Countries differ in the diversification of their exports and products differ in the number of countries that export them -their ubiquity.We document a new stylized fact in the global pattern of exports: a
Much of the analysis of economic growth has focused on the study of aggregate output. Here, we deviate from this tradition and look instead at the structure of output embodied in the network connecting countries to the products that they export.We characterize this network using four structural features: the negative
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's exports and the
and the average
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products. We argue that this is not implied by current theories of international trade and show that it is not a consequence of the heterogeneity in the level of diversification of countries or of the heterogeneity in the ubiquityof products. We account for this by constructing a model that assumes that each product requires
exports, and the non-normal distributions for product ubiquity, country diversification and product co-export. We model the structure of the network by assuming that products require
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a country can only make the products for which it has all the requisite capabilities. Products differ in the number and specific nature of the capabilities they require, as
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number/nature of the
completeness of the set of
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Products that require more capabilities are accessible to fewer countries (are less ubiquitous), while countries that have more capabilities have what is required to make more products (are more diversified). Our model implies that the return to the accumulation of new capabilities increases exponentially with the number of capabilities
We solve the model assuming that the probability
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and that this convexity increases when either the total number of capabilities that exist in the world increases or the average complexity of products (the number of capabilities they require) increases. This defines a "quiescence trap" in which countries with few capabilities have negligible returns to the accumulation of new capabilities , while countrieswith many capabilities experience large returns to the accumulation of additional capabilities . We calibrate the model to three different sets and show that it reproduces the empirically observed distributions. We conclude that in our world the quiescence trap is strong
a capability and that a product requires a capability are constant and calibrate it to the data to find that it accounts well for all of the network features except for the heterogeneity in the distribution of country diversification. In the light of the model, this is evidence of a large heterogeneity in the distribution of capabilities across countries. Finally, we show that the model implies that the increase in diversification that is expected from the accumulation of a small number of capabilities is small for countries that have a few of them and large for those with many. This implies that the forces that help drive divergence in product diversity increase with the complexity of the global economy when capabilities travel poorly