Harmonization of Product Classifications: A Consistent Time Series of Economic Trade Activities

Abstract

Firm-product data provide information for various research questions in international trade, industrial or innovation economics. However, working with these data requires harmonizing product classifications consistently over time to avoid internal validity issues. Harmonization is required because classification systems like the EU classifications combined nomenclature (CN) for goods or the Prodcom for the production of manufactured goods undergo several changes. We have addressed this problem and developed an approach to harmonize product codes. This approach tracks product codes from 1995 to 2022 for CN and 2001 to 2021 for Prodcom. Additional years can be conveniently added. We provide the harmonized product codes for CN and Prodcom in the selected period's last (or first) year. Our approach is summarized in an open-source R package so that researchers can consistently track product codes for their selected period. We demonstrate the importance of harmonization using the micro-level trade data for Croatia as a case study. Our approach facilitates working with firm-product data, allowing the analysis of important research questions.