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


The literature on knowledge diffusion shows that it decays strongly with distance. In this paper we document that the probability that 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, having a neighbor with comparative advantage in them is associated with a growth of exports that is higher by 1.5 percent per annum. While these results could be driven by a common third factor that escapes our controls, they are what would be expected from the localized character of knowledge diffusion.

CID Working Paper: 235
Keywords: export similarity, innovation, productivity, knowledge, technology, diffusion, spillovers
JEL Classification: O31, O33, F10, F62, F63
Last updated on 12/07/2017