Manufacturing export diversification and regionalization of trade: Which destinations for newly exported goods?

Abstract

This paper studies the extent to which export diversification is related to the regionalization of trade by examining the destination pattern of newly exported goods. Using a panel database of bilateral trade between 116 countries of 1090 HS4 manufacturing goods over the period 2000–2010, I first show that for almost all countries in the sample, the average destination of goods not exported before 2000 and newly exported over the 2000–2010 period is more “accessible” in terms of distance, language or tariffs preferences compared to the average destination of traditionally exported goods. I find that this pattern of destinations is weakly dependent on the “age” of the exported goods but rather is explained by the fact that these newly exported goods have emerged in industries where the country has high production and export costs. It follows that export diversification is accompanied by trade regionalization, at least in the medium term.