Less developed countries benefit from exports to developed nations, study finds.
The article estimates export demand functions for different countries, focusing on the impact of export supply on these functions. The results show that price elasticity is around -1.4 and elasticity with respect to world trade is 1.6. Income elasticities are lower than previously thought, suggesting that activity in developed countries affects growth in less developed ones. Differences in income and price elasticities are mainly due to variations in product composition across countries.