The global geography of income and export patterns
(2023) , 32 pages
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- Abstract
- This paper studies heterogeneity in the income elasticity of exports across origin countries. Combining insights of the economic geography literature and the home market effect literature, I argue that foreign consumer preferences drive product specifications and thus export patterns. I capture foreign consumer preferences with a multilateral income term, “quality market potential”. Analysing product-level trade flows with a gravity framework, I show that countries with high quality market potential export more to high-income destinations. The effect outweighs the standard home market effect of domestic per capita income, is strongest for developing countries, and works chiefly through the quantity margin.
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Citations
Hillrichs, D. (2023). The global geography of income and export patterns (LIDAM Discussion Paper IRES/2023/01). https://hdl.handle.net/2078.5/104902