Managing Openness and Volatility: The Role of Export Diversification
AbstractAs developing countries look to embrace an outward-oriented growth strategy, some may be concerned about the possibility that increased openness will be accompanied by increased volatility. However, although a more open economy may face increased volatility in its terms of trade, openness confers diversification benefits. In this note, we argue that export diversification is a key mitigating factor for the total effect of openness on volatility. More specifically, we show that most developing countries fall on the “good” side of a diversification threshold, where they are likely to experience less volatility as they pursue a strategy of greater openness.
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Bibliographic InfoArticle provided by The World Bank in its journal Economic Premise.
Volume (Year): (2010)
Issue (Month): 6 (March)
trade; openness; volatility; export; diversification; developing countries; trade policy; imports; terms of trade; development;
Other versions of this item:
- Mona Haddad & Jamus Jerome Lim & Christian Saborowski, 2010. "Managing Openness and Volatility : The Role of Export Diversification," World Bank Other Operational Studies 10203, The World Bank.
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- O19 - Economic Development, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
- F1 - International Economics - - Trade
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F15 - International Economics - - Trade - - - Economic Integration
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- Farole, Thomas & Reis, Jose Guilherme & Wagle, Swarnim, 2010. "Analyzing trade competitiveness : a diagnostics approach," Policy Research Working Paper Series 5329, The World Bank.
- Otaviano Canuto & Manu Sharma, 2011. "Asia and South America: A Quasi-Common Economy Approach," World Bank Other Operational Studies 10076, The World Bank.
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