TDoes Product Differentiation Explain The Increase in Exports of Transition Countries?

Abstract

The paper analyzes the increase in transition countries’ exports to their non-traditional trade partners. It uses four different measures of product differentiation to find out the extent that the increase in product variety explains this phenomenon. It is found that opening up to new trade partners first increases the number of sectors in which trade occurs. This is followed by a brief period of specialization in some select sectors, and finally an increase in the number of varieties of products in these sectors. Lastly, the increase in product variety in CEEC has been much more substantial than in CIS.