Series: Working Papers. 1513.
Author: Juan de Lucio, Raúl Mínguez, Asier Minondo and Francisco Requena.
Published in: The World Economy. May 2016. Vol. 39, Issue 5. Pages 708-736
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Abstract
We use network-analysis tools to identify communities in the web of exporters' destinations. Our network-based community measure is purely outcome-based; it captures multilateral rather than bilateral dependence across countries; and it can be calculated at the industry level. We next use our network-based community measure as a predictor of additional countries chosen by firms expanding their export destinations portfolios. Using data on new Mexican exporters, the probability of choosing a new export destination doubles if it belongs to the same community of any of the firm’s previous destinations. The introduction of the network-based community variable improves the accuracy of the model by up to 19% relative to a model that only includes gravity variables. Industry-specific communities and general communities play similar roles in determining the dynamics of Mexican exporters' country portfolios.