An Empirical Examination of Export Variety: Regional Heterogeneity within a Nation

Authors


  • I would like to thank the anonymous referees for their comments on earlier versions of this paper. I also benefited from discussions with Sven Arndt, Fumio Dei, Kyoko Hirose, Ken Itakura, Yoshihiko Otani and other seminar participants at Kyushu Sangyo University, Kobe University, Tohoku University and All China Economics. I am grateful to Kouichi Kuroki for his excellent research assistance. I also thank Satoshi Honma for helping me with the prefecture map. This research is financially supported by Grant-in-Aid for Scientific Research (C)(20530227) from JSPS.

Abstract

Recognising that similar goods are produced in different subregions within a country, we offer new evidence of variety expansion in a nation’s exports. We divide Japanese national exports into 41 prefectural subregions with over 7,000 product categories and construct subregional export margins for the years between 1988 and 2005. First, we find strong evidence of regional heterogeneity in terms of export product coverage, and the export variety of most regions expands in our sample period. Second, we find that the extensive margin accounts for over 60 per cent of the increase in exports of larger subregions, similar to the findings in the international cross-country study. These findings imply that accounting for export variety in terms of new exports from subregions within a country strengthens the contribution of extensive margin in the growth of exports.

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