# The structure and growth of international trade

Riccaboni, Massimo and Schiavo, Stefano The structure and growth of international trade. Working Paper # /2010

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## Abstract

The paper develops a model of proportionate growth to describe the dynamics of international trade flows. We show that a large number of the empirical regularities characterizing international trade -such as the fraction of zero trade flows across pairs of countries, the positive relationship between intensive and extensive margins, the high concentration of trade with respect to both products and destinations, the core-periphery structure of exchanges- are well explained by this simple stochastic setup. This helps us to distinguish among economically relevant regularities and those simply resulting from the mechanical interactions among agents. Furthermore, our model can be used to describe the process of self-discovery' that lie at the foundations of suc- cessful export-led growth and is thought to play a crucial role in the process of economic development. Our model correctly predicts that large export flows are rare events, as pointed out in the empirical literature: yet, countries characterized by large discovery' efforts are much more likely to draw a `big hit' due to the (very skewed) shape of the distribution of bilateral export flows.

Item Type: Working Paper (Working Paper) H Social Sciences > HB Economic TheoryH Social Sciences > HD Industries. Land use. Labor Economics and Institutional Change Ms T. Iannizzi 19 Jan 2012 13:11 24 Jan 2014 14:23 http://eprints.imtlucca.it/id/eprint/1069