Geographical Diversification of Developing Country Exports

SummaryThis paper shows that export costs, tariffs, and international transport costs are all robustly associated with geographical export diversification in a sample of 117 developing countries. Reducing each of them by one standard deviation could lead to increases in the number of export destinations of 12%, 3%, and 4%, respectively. From a geographical diversification point of view, trade facilitation at home is an important complement to improving market access abroad. Customs procedures and document preparation in exporting countries have particularly strong effects. Trade costs in general have larger effects in manufacturing, and highly differentiated sectors.