The Role of Product Deepening, Emergence, and Failure in Export Performance: A Comparative Study of Developing Asian Countries
Keywords:
Trade margins, International trade, Export performanceAbstract
This study explores the contribution of the deepening of existing products (intensive margin), the emergence of new products (extensive margin), and the demise of existing products (failure margin) to the export expansion of developing Asian countries in 1990-2017. Using data based on the Standard International Trade Classification (SITC) revision 3 at the 5-digit level, we find that product deepening plays a crucial role in export success for total merchandise and its subcategories. There is less window opportunity for the emergence of new products when a country already has a high number of exported products. The emergence of new products and product failure margins are important for latecomer exporting countries in the region. GDP per capita, world demand, and FDI inflow have a positive impact on the deepening of existing products. Product emergence is significantly aided by trade barrier reductions.
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