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Abstract
Are similar types of goods imported to countries that have similar characteristics? It is possible that the total volume of trade is similar and yet the types of goods are different. This article investigates the trading pattern of countries with similar characteristics. More specifically, we analyze the relationship between the import patterns and income distributions of importers. We develop an import similarity index to portray the composition of imports and utilize the idea of “market overlap” (Bohman & Nilsson 2007a) to represent the similarity of income distributions across different importing countries. We provide empirical evidence to support the notion that countries with similar income distributions display similar import patterns.
Notes
1. 1Several papers have used kernel smoothing techniques to estimate income distributions, including Jenkins (Citation1995), Johnson (Citation2000), and Dai and Sperlich (Citation2010). We utilize a bandwidth of 2500 in our estimations. Our results, available upon request from the authors, are robust across a broad range of bandwidths.
2. 2The control variables were redefined as either (i) the difference between two importers (e.g., popdiff becomes the absolute log difference of population between the two importing countries) or (ii) dummies, such as rta, which are equal to 1 if there is free trade argument between two importers. Other variables were defined in a similar fashion.