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Policies for economic diversification

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  • Rodrik, Dani

Abstract

This article begins by showing that not all developing countries concentrate their exports in products which make intensive use of natural resources or cheap labour, and that those which also export some products typical of more developed countries tend to grow faster, apparently independently of their human capital endowment or the quality of their institutions. For this purpose, an index is used which measures the degree to which each country displays this type of export mix. This is an idiosyncratic phenomenon which seems to be linked with the capacity to undertake the production and export of new products. There is therefore a place for incentive policies, accompanied by the ability of the government to recognize failed attempts and to stop subsidizing them. Because of the idiosyncratic nature of the phenomenon, it is not possible to propose universal solutions, but the author does set out ten principles to be borne in mind in policy design in each country.

Suggested Citation

  • Rodrik, Dani, 2005. "Policies for economic diversification," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    • Handle: RePEc:ecr:col070:11111
    Note: Includes bibliography
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    File URL: http://repositorio.cepal.org/handle/11362/11111
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    Citations

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    Cited by:

    1. Ana Luiza Cortez & Mehmet Arda, 2014. "Global trade rules for supporting development in the post-2015 era," CDP Background Papers 019, United Nations, Department of Economics and Social Affairs.
    2. Torres, Miguel & Hofman, André A., 2008. "ECLAC thinking in the CEPAL Review (1976-2008)," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    3. Elvira Mami, 2023. "The role of sovereign wealth funds in natural resource-rich countries: A systematic meta-narrative review," Journal of International Business Policy, Palgrave Macmillan, vol. 6(3), pages 356-371, September.
    4. Gallagher, Kevin P. & Shafaeddin, M., 2010. "Policies for industrial learning in China and Mexico," Technology in Society, Elsevier, vol. 32(2), pages 81-99.
    5. Bianca Francisco Garcia Benavides & Fernando Gomez-Zaldivar, 2023. "Key factors for productive diversification: opportunities for the design of regional industrial strategies in Mexico (Factores clave para la diversificacion productiva: oportunidades para el diseño d," Sobre México. Revista de Economía, Sobre México. Temas en economía, vol. 1(8), pages 69-93.
    6. Jorge Braga de Macedo & Luís Brites Pereira, 2014. "Cape Verde and Mozambique as Development Successes in West and Southern Africa," NBER Chapters, in: African Successes, Volume IV: Sustainable Growth, pages 203-293, National Bureau of Economic Research, Inc.
    7. Osakwe, Patrick N., 2007. "Foreign Aid, Resources and Export Diversification in Africa: A New Test of Existing Theories," MPRA Paper 2228, University Library of Munich, Germany.
    8. Igor Grebenkin, 2018. "The Influence of Diversification on Innovative Activity in Regional Manufacturing Industry," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(2), pages 600-611.
    9. OSAKWE, Patrick N, 2007. "Export Diversification And The Dilemma Of African Development," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 7(2), pages 143-154.
    10. Heiko Hesse, 2008. "Export Diversification and Economic Growth," World Bank Publications - Books, The World Bank Group, number 28040, December.
    11. Diogo Ferraz & Fernanda P. S. Falguera & Enzo B. Mariano & Dominik Hartmann, 2021. "Linking Economic Complexity, Diversification, and Industrial Policy with Sustainable Development: A Structured Literature Review," Sustainability, MDPI, vol. 13(3), pages 1-29, January.
    12. Shahzad, Umer & Madaleno, Mara & Dagar, Vishal & Ghosh, Sudeshna & Doğan, Buhari, 2022. "Exploring the role of export product quality and economic complexity for economic progress of developed economies: Does institutional quality matter?," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 40-51.
    13. Guimón, José & Chaminade, Cristina & Maggi, Claudio & Salazar-Elena, Juan Carlos, 2018. "Policies to Attract R&D-related FDI in Small Emerging Countries: Aligning Incentives With Local Linkages and Absorptive Capacities in Chile," Journal of International Management, Elsevier, vol. 24(2), pages 165-178.
    14. Kevin Gallagher & Roberto Porzecanski, 2009. "China and the Latin America Commodities Boom: A Critical Assessment," Working Papers wp192, Political Economy Research Institute, University of Massachusetts at Amherst.
    15. Tugores, Juan, 2008. "Regional integration and public policy. Evaluation of the European experience and possible implications for Latin American integration," Estudios y Perspectivas – Sede Subregional de la CEPAL en México 4879, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    16. Bakari, Sayef & Mabrouki, Mohamed, 2018. "The Impact of Agricultural Trade on Economic Growth in North Africa: Econometric Analysis by Static Gravity Model," MPRA Paper 85116, University Library of Munich, Germany.

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