Product Relatedness in Export Diversification. Evidence from Brazilian Exporters

CIRERA XAVI; ANABEL MARIN

Oxford

Congreso; 4th ESRC Research Methods Festival, Oxford, 8th of July 2011; 2011

ESRC

This paper analyses one unexplored dimension of export diversification: the capacity of firms to diversify to less related products. This is critical for developing countries, heavily dependent on primary commodities. Using a unique dataset that links data on exports, innovation and firms’ characteristics in Brazil, we find that unrelated diversification is far more common than expected. We also find that firms are more likely to diversify to unrelated activities when they have a rich and diversified knowledge base and invest in process innovation.