Which export variety matters for urban economic growth, related or unrelated variety?

Abstract

The relationship between export variety and economic growth has been paid much attention in academia. This paper discusses more deeply the relationship between export related and unrelated variety and economic growth, rather than mere export variety. This paper uses the entropy measurement method to measure the level of export variety of Chinese cities and use the concept of "proximity" proposed by Hidalgo to divide the related variety and unrelated variety. Using the panel data of 252 prefecture-level cities in China from 2000 to 2011, we attempt to explore the relationship between export variety, related and unrelated variety and urban economic growth. The empirical results show that it is not export variety as such, but related and unrelated variety that has effects on economic growth. Export related variety has a positive effect on economic growth, while unrelated variety has a negative effect. And there are obvious regional and size differences. The impact of export related and unrelated variety on eastern and coastal cities is greater than that on central and inland cities, and the impact on large-size cities is also greater than that on medium-size cities.