Joint UNU-MERIT/School of Governance Seminar: “How exports matter: Trade patterns over development stages”
In this seminar, Prof. Mark Sanders (Utrecht University School of Economics) proposes a proxy for the maturity of a country’s export bundle based on product life cycle theory. Employing a conditional latent class model, he then examines the effect of maturity of countries’ exports on their economic growth for 98 countries over the period 1988 to 2005.
This effect has been found to differ across three endogenously determined growth regimes; it is real GDP per capita predicts the regime membership. The richest countries grow faster when they specialize in less-mature products in an advanced country regime. The effect of maturity turns insignificant for the least advanced countries in the developing country regime. And at intermediate levels of GDP per capita, in an emerging country regime, countries grow faster and exhibit strong convergence by exporting more mature products. The results confirm earlier evidence that what you export matters for growth — but more importantly, when you export matters too. Countries in early stages of development should focus on acquiring market share in mature markets with routine technologies, whereas emerging economies face the challenge of, at some point, switching from mature to new products as they approach the technology frontier. At that frontier they must join the advanced economies who continuously switch into (increasingly) less mature innovative products to stay ahead of increasing competition from abroad.
Prof. Mark Sanders, Utrecht University School of Economics, researches and teaches topics that connect entrepreneurship, innovation and the transition towards more sustainable economic growth. His methods are both empirical and theoretical and his teaching is both within the economics department and in courses at the faculty of geosciences and sciences. Mark is a member of the Sustainable Finance Lab that aims to make financial markets contribute to this transition.
For more information please see the Calendar of upcoming events page on the UNU-MERIT website.