Trade costs and the composition of developing countries' exports

This study investigates whether trade costs have a systematic influence on the composition of developing countries' exports, one which is distinct from their effect volume trade. It uses World Bank's bilateral cost dataset and incorporates flows for large set countries. The identification strategy exploits variation in across countries differences sensitivity industries employs shifter as an instrument to overcome potential endogeneity costs. paper finds that export economies fashioned by costs, with higher lowering (other things constant) share industry's exports country's total more trade-cost-sensitive industries. policy implication clear: reducing encourages shift country favor relatively trade-cost-intensive tend also be technologically advanced.