Explaining Export Varieties: the Role of Comparative Advantage

Abstract

This study investigates whether the variety of products in a country's exports is explained by the country's comparative advantage. The author's model predicts greater export variety in industries that intensively use a production factor with which the country is relatively well-endowed. Empirical tests using U.S. import data confirm this theoretical prediction by showing that countries with a relative abundance of skilled labor tend to export a greater variety of products made by industries using more skilled labor, and that countries with an abundance of unskilled labor tend to export a greater variety of products made by industries using more unskilled labor.