Export Diversification: What's behind the Hump?

Abstract

The paper explores the evolution of export diversification patterns along the economic development path. Using a large database with 156 countries over 19 years at the HS6 level of disaggregation (4'991 product lines) we look for action at the "intensive" and "extensive" margins (diversification of export values among active product lines and by addition of new product lines respectively) using various export concentration indices and the number of active export lines. We also look at new product introduction as an indicator of "export-entrepreneurship". We find a hump-shaped pattern of export diversification similar to what Imbs and Wacziarg (2003) found for production and employment. Diversification and subsequent re-concentration take place mostly along the extensive margin, although the intensive margin follows the same pattern. This hump-shaped pattern is consistent with the conjecture that countries travel across diversification cones, as discussed in Schott (2003Schott ( , 2004 and Xiang (2007).

Trade partner diversification and growth: How trade links matter

“…They unravel interesting characteristics of the growth acceleration process: interactions of agglomeration externalities and proximity of products are shown to determine the likelihood of higher growth. Their findings also support those of Cadot et al (2011) who show that a country travels along diversification cones as its income grows. 2 This line of literature focuses on sector-specific links and hence offers insights for possible effects of industry/goods-specific shocks on growth.…”

Product diversification, relative specialisation and economic development: Import–export analysis

“…Looking from the side of exports, their diversification (de-specialisation) has been analysed as a factor reducing risk and exposure to idiosyncratic shocks (Hesse, 2009). This is particularly important in the case of low income countries, which -as shown in recent literature on export diversification and development 1 (Cadot et al, 2011a;Minondo, 2011;Parteka and Tamberi, 2013) -often have very specialised (i.e. poorly diversified) economic structures and/or are dependent on natural resources.…”

Finance, Comparative Advantage, and Resource Allocation*

“…15 The results remain qualitatively the same. In the third and fourth column, we add arable land per worker as a third production factor when computing the distance to comparative advantage.…”