Aug 17, 2009

Easterly on trade and development

Easterly has a recent paper co-authored with Ariell Reshef which highlights the importance of strategic exports. I particularly appreciate the policy implications, which are counter intuitive enough to be entertaining:

"Economic development is strongly correlated with success at exporting manufactures. Manufacturing exports are dominated by a few "big hits". The per capita value of the top 3 product-destination export flows has a remarkably high correlation with income per capita (0.81 in logs). These findings do not support a "picking winners" policy for export development; the power law characterization implies that the chance of picking a winner diminishes exponentially with the degree of success."

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