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Patterns of export diversification in developing countries: intensive and extensive margins

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Abstract

This paper uses highly disaggregated trade data to investigate geographic and product diversification patterns across a group of developing nations for the period from 1990 to 2005. The econometric investigation shows that the gravity equation fits the observed differences in diversification across nations. We find that exports at the intensive margin account for the most important share of overall trade growth. At the extensive margin, geographic diversification is more important than product diversification, especially for developing countries. Taking part in FTAs, thereby reducing trade costs, and trading with countries in the North are also found to have positive impacts on export diversification for developing countries.

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Paper provided by Economics Section, The Graduate Institute of International Studies in its series IHEID Working Papers with number 20-2007.

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Length: 34
Date of creation: May 2007
Date of revision: Jul 2007
Handle: RePEc:gii:giihei:heiwp20-2007

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Keywords: export diversification; intensive margin; extensive margin;

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  1. Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Ali, Ridwan & Alwang, Jeffrey & Siegel, Paul B., 1991. "Is export diversification the best way to achieve export growth and stability? A look at three African countries," Policy Research Working Paper Series 729, The World Bank.
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  14. repec:rus:hseeco:121626 is not listed on IDEAS
  15. Wacziarg, Romain & Imbs, Jean, 2000. "Stages of Diversification," Research Papers 1653, Stanford University, Graduate School of Business.
  16. Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
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