CID Working Paper No. 123, December 2005 (Revised March 2006)

What You Export Matters

Ricardo Hausmann, Jason Hwang, and Dani Rodrik

Abstract 

When local cost discovery generates knowledge spillovers, specialization patterns become partly indeterminate and the mix of goods that a country produces may have important implications for economic growth. We demonstrate this proposition formally and adduce some empirical support for it. We construct an index of the "income level of a country's exports," document its properties, and show that it predicts subsequent economic growth.

Keywords: specialization, productivity, growth

JEL codes: F1, O4

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