We investigate the export-growth relationship at disaggregate levelsdisaggregation both at the country level and at the level of exportsfocusing on the diversification and the composition of exports of countries. In a sample of 65 countries for the period 1965-2005 the dynamic panel estimation reveals that both diversification and composition of exports are important determinants of economic growth after controlling for the impacts of other variables like lagged income, investment, and infrastructure. There is a critical level of export concentration beyond which increasing export specialization leads to higher growth. Below this critical level, diversification of exports matters for gross domestic product (GDP) growth. Growth of high technology exports also contributes to the output growth; the relationship becomes stronger for countries that have share of manufacturing exports in their total exports greater than the world average. These results are robust even when the dataset is classified in four sub-panels based on the export-economic growth relationship.

No abstract

No abstract

No abstract

In the context of quality content of export baskets becoming the most important determinant of export growth for developing countries, we show that reduction in tariff on final import goods asymmetrically affects the quality of skill‐based export goods that differ with respect to the relative skill intensity of their higher‐quality varieties. This offers a plausible explanation for asymmetric quality variations across product groups observed for Brazil and India since the 1980s. On the contrary, tariff‐reduction‐induced quality variations, regardless of their asymmetry, accentuate wage inequality in all dimensions by depressing the informal unskilled wage through displacement of unskilled workers from the formal sector and the consequent informalization of the economy. This suggests that tariff reductions accentuating wage inequality, as shown in the existing literature, may be underestimated if induced variations in the quality of export goods are unaccounted for. A quality‐content production subsidy or a subsidy targeting the use of skilled labor, given to producers of the export good whose quality is downgraded as a consequence of tariff reduction, can be used as a concurrent policy to mitigate such effect. The wage inequality will also decline to some extent following such subsidies. A proportional factor income tax may be a quality‐neutral way to finance the subsidies.