Export Market Relatedness, Geographical Diversification and Regional Export Growth in China

Existing literature found both positive and negative relationship between geographical diversification and economic performance. Our research helps reconcile such contradictory results, and stresses that such conflict is associated with relatedness between export markets. Using China's custom data, we show that having diverse related export markets facilitates regional export growth due to knowledge spillovers among manufacturers and economies of scope for trade intermediaries. Having many unrelated export markets, however, has a negative impact on regional export growth, as it dilutes valuable resources. Furthermore, we highlight the role of trade intermediaries, which have been less studied than manufacturers in literature on export market diversification.