Export transitions

Abstract

This paper uses a broad multi-country dataset to describe the main stylized facts about export performance in the last four decades. First, transition probability matrices are computed to look at changes in the position of countries at the world distribution of the export to GDP ratio. It finds that transitions toward high export ratios have been mainly experienced by Asian countries, but also that some reformers, like Mexico and Chile, have been able to improve their position relative to other studied economies. African countries mainly sunk to the bottom part of the world distribution, although they constitute only half of the economies with relatively bad export performance. In the consideration of the structural factors that may play an important role for long-run transitions, the results suggest that more open economies and those with better institutions are more likely to move to high export ratios in the long-run. Second, the within-country experiences are analyzed for identifying episodes of export transitions. Using an event study methodology, a very weak association is found between export transitions and investment rate. In contrast, the results suggest that transitions are potentially driven by improvements in financial development. Finally, favorable terms of trade, increments in productivity, and reductions in exchange rate distortions are not found to be a catalyst for export transitions.