Neighbors and the Evolution of the Comparative Advantage of Nations: Evidence of International Knowledge Diffusion?

Citation:

Bahar, Dany, Ricardo Hausmann, and César A Hidalgo. 2014. “Neighbors and the Evolution of the Comparative Advantage of Nations: Evidence of International Knowledge Diffusion?” Journal of International Economics 92 (1): 111-123.
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Abstract:

The literature on knowledge diffusion shows that knowledge decays strongly with distance. In this paper we document that the probability a product is added to a country’s export basket is, on average, 65% larger if a neighboring country is a successful exporter of that same product. For existing products, growth of exports in a country is 1.5 percent higher per annum if it has a neighbor with comparative advantage in these products. While these results could be driven by a common third factor that escapes our controls, they align with our expectations of the localized character of knowledge diffusion.

Link to paper

Last updated on 01/13/2014