Dependence on export destination in countries dependent on primary-export activity: an estimate for Canada, Chile, and Ecuador

Abstract

Exports not only depend on the real exchange rate and foreign income, but also on variables related to the concentration in the destination market. This research uses time series data from Canada, Chile and Ecuador from the period 1980-2015 to analyze the export function of the three countries with the defined theoretical variables and then to estimate an econometric model including control variables. We find that foreign income is positively related to the level of exports in the three countries, while the real exchange rate is negatively related only to Canada’s exports. By adding control variables, it was found that manufactures and natural resources are also positively related to exports. One implication of economic policy is that governance levels must be improved, fiscal measures must be adopted, macroeconomic stability must be guaranteed, and industrial and commercial policies that contribute to productivity and economic diversification must be promoted.