Description

In this paper I use a broad multi-country dataset to analyze divergent experiences in export orientation over time. First, I use transition probability matrices for comparing how countries move across the world distribution for different time periods. I find that transitions toward high export ratios have been mainly experienced by Asian countries, but also some reformers like Mexico and Chile have been able to increase their exports significantly. Countries making transitions toward low export ratios are mainly from Africa, but these countries only constitute a half of economies with bad export performance. I focus then on which structural factors may be important 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. Finally, I explore within-country experiences for identifying episodes of export transitions. Using an event study methodology, I find a very weak association between export transitions and economic growth and investment rate. In contrast, my 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.