Want Export Diversification? Educate the Kids First

Abstract

This paper uses Bayesian model averaging to uncover the true determinants of export diversification among 36 potential factors, and thus 236 potential models. Using data from 2001 to 2010, our results reveal two strong predictors: Primary school enrollment (99.7% posterior inclusion probability in the true model) raises export diversification, whereas the share of natural resources in gross domestic product (98.6%) lowers diversification levels. The importance of basic education coverage offers policymakers an opening toward diversifying exports, at least in the long run. This result is robust to accounting for the endogeneity of income levels by applying an instrumental variable BMA method. (JEL C11, F1, F34, O1, O2, O11)

What drives cross-country differences in export variety? A bilateral panel approach

“…Secondly we refer to the literature on the factors determining export diversification. The degree of export diversity appears to be driven mainly by: per capita income ( De Benedictis et al., 2009 ; Parteka, 2010 ; Cadot et al., 2011 ; Parteka and Tamberi; 2013a and 2013b; Mau, 2016 ) or productivity ( Cieślik and Parteka, 2018 ); the size of the countries ( Parteka and Tamberi, 2013b ; Basile et al., 2018 ; Cieślik and Parteka, 2018 ), institutional setting ( Sheng and Yang, 2016 ), human capital ( Agosin et al., 2012 ; Jetter and Ramírez Hassan, 2015 ) trade cost factors, trade liberalisation and trade preferences ( Regolo, 2013 ; Persson, 2013 ; Dutt et al., 2013 ; Feenstra and Ma, 2014 ; Mau, 2016 ; Persson and Wilhelmsson, 2016 ), geography, spatial effects and location ( Agosin et al., 2012 ; Basile et al., 2018 ).…”

“…In considering the human capital ( HC ) as a driver of cross-country differences in export variety ( Jetter and Ramírez Hassan, 2015 ), we use the human capital indicator of PWT 9.0. As a robustness check 14 we also consider other measures of human capital: we adjust the aggregate labour force L by the human capital hc index from the dataset in Barro and Lee (2013) : L HC ​= ​ hc∗L .…”

“…As to the variety of trade, trade diversification determinants have been modelled principally in settings in which the composition of a country’s trade basket is measured on the basis of total exports, i.e. exports to the world (among others: De Benedictis et al., 2009 ; Cadot et al., 2011 ; Agosin et al., 2012 ; Parteka and Tamberi, 2013a , 2013b ; Jetter and Ramírez Hassan, 2015 ; Mau, 2016 ; Basile et al., 2018 ). Most of these studies posit the most general empirical model, in which the magnitude of a country’s export variety (export diversification) is explained by a set of the exporter’s characteristics: typically, countries that are richer, larger and less isolated geographically have more heterogeneous export structures than less developed and/or smaller economies located further away from the core of the international trade system (see Basile et al., 2018 for a review).…”

Uncovering Value Drivers of High Performance Soccer Players

“…extension of BMA, that formally accounts for model uncertainty in the presence of endogeneity to check robustness regarding this issue (Eicher, Lenkoski, & Raftery, 2009). Although BMA enjoys a long tradition in statistics (Leamer, 1978), its application in economics has only recently come into its own; being economic growth (Fernandez, Ley, & Steel, 2001b;Sala-i Martin, Doppelhofer, & Miller, 2004) and trade (Eicher, Henn, & Papageorgiou, 2012;Jetter & Ramírez Hassan, 2015) good examples of its application. Moral-Benito (2013b) provides a detailed survey on the use of BMA methods in economics.…”

Education and the Evolution of Comparative Advantage

“…3 See, for example, Johnson (1982); Amsden (2001); Jomo (2003); Felker, Jomo, and Rasiah (2013); and Studwell (2013). 4 Previous studies show that: more rapid employment growth in skill-intensive industries in countries that had more highly educated workers and in those that expanded education faster (Ciccone and Papaioannou 2009); more educated countries are better able to maintain a diverse export mix in the face of terms-of-trade shocks (Agosin, Alvarez, and Bravo-Ortega 2012); and primary education attainment is a strong Bayesian predictor of national export diversification (Jetter and Ramírez Hassan 2015). None of this work examines the role of education in overcoming path dependence.…”