Trade Liberalization and Export Performance: A Literature Review

In a context of trade liberalization, this article reviews the most recent economic literature related to the sources of countries' export performance. In such a context, world trade flows and international competition increase. International trade evolves in favor of large emerging countries, they quickly penetrate the world market and specialize in high-sophisticated products. Furthermore, emerging countries have expanding their exports much faster than the leading developed countries. The reshaping of the world market depends on these emerging countries. These findings lead us to study the sources of countries' export performance. On the one hand, this literature review presents the traditional measures of countries' export performance focusing on export diversification. These measures suggest that diversification goes hand-in-hand with countries' growth and economic development. On the other hand, this literature review details the new measures of countries' export performance related to export sophistication, product space, and economic complexity. These measures converge towards specialized diversification, i.e. a diversification into related products which generates new activities that are rooted in a country's initial patterns of specialization. Therefore, the process of specialized diversification focuses on countries' structural transformation in order to become more complex economies.