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Relatedness and Diversification in the EU-27 and ENP countries

Author

Listed:
  • Ron Boschma
  • Gianluca Capone
Abstract
This paper analyzes the process of industrial diversification in the EU-27 and ENP countries in the period 1995-2010 by means of world trade data derived from the BACI database (elaborated UN Comtrade data). Our results show that in both the EU-27 and the ENP countries, the evolution of the export mix is strongly path-dependent: countries tend to keep a comparative advantage in products that are strongly related to their current productive structure, and they also diversify in nearby products. However, this effect is much stronger for ENP countries, signalling their lower capabilities to diversify in products that are not very near to their productive structure. We also show that the future export structures of countries are affected by their imports: both the EU-27 and ENP countries keep a comparative advantage in products that are strongly related to their imports, but only EU countries show a strong capability to diversify in new products from related import sectors. Our results also hold when controlling for geographical and institutional proximity.

Suggested Citation

  • Ron Boschma & Gianluca Capone, 2014. "Relatedness and Diversification in the EU-27 and ENP countries," Papers in Evolutionary Economic Geography (PEEG) 1407, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Feb 2014.
    • Handle: RePEc:egu:wpaper:1407
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    File URL: http://econ.geo.uu.nl/peeg/peeg1407.pdf
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    References listed on IDEAS

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    Cited by:

    1. Cyrielle Gaglio, 2015. "Measuring Country Competitiveness: A Survey of Exporting-based Indexes," GREDEG Working Papers 2015-42, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    2. Vicente Donoso & Víctor Martin, 2016. "Product relatedness and economic diversification in the USA: an analysis at the state level," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(2), pages 449-471, March.
    3. Nguyen Xuan Trung & Nguyen Thi Hien, 2022. "The Potential of Vietnam's Agricultural Exports to the Indian Market: Analysis of Supply and Demand Factors," Business and Economic Research, Macrothink Institute, vol. 12(4), pages 108-122, December.

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    More about this item

    Keywords

    diversification; relatedness; European Neighborhood Policy; trade;
    All these keywords.

    JEL classification:

    • F19 - International Economics - - Trade - - - Other
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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