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The conflicting impacts of export fluctuations and diversification programmes

  • Michael Webb
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    While analyses of export instability and diversification policies typically focus on aggregate earnings, a conflict can arise between income instability at the aggregate and household levels. Diversification can reduce a country's aggregate income instability and simultaneously increase the instability experienced by many households, and perhaps by every household in the country. We demonstrate how alternative export portfolios can produce this conflict in instability. The conflict means that the conclusions from previous empirical studies need to be qualified and policy recommendations need to be carefully formulated.

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    Article provided by Taylor & Francis Journals in its journal The Journal of International Trade & Economic Development.

    Volume (Year): 14 (2005)
    Issue (Month): 3 ()
    Pages: 271-280

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    Handle: RePEc:taf:jitecd:v:14:y:2005:i:3:p:271-280
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    1. C. John McDermott & Alasdair Scott & Paul Cashin, 1999. "The Myth of Comoving Commodity Prices," IMF Working Papers 99/169, International Monetary Fund.
    2. Brundell, Peter & Horn, Henrik & Svedberg, Peter, 1981. "On the Causes of Instability in Export Earnings," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 43(3), pages 301-13, August.
    3. Deaton, A-S & Miller, R-I, 1995. "International Commodity Prices, Macroeconomic Performance, and Politics in Sub-Saharan Africa," Princeton Studies in International Economics 79, International Economics Section, Departement of Economics Princeton University,.
    4. M. Ayhan Kose & Raymond Riezman, 1999. "Trade Shocks and Macroeconomic Fluctuations in Africa," CESifo Working Paper Series 203, CESifo Group Munich.
    5. Kenen, Peter B & Voivodas, Constantine S, 1972. "Export Instability and Economic Growth," Kyklos, Wiley Blackwell, vol. 25(4), pages 791-804.
    6. Soutar, Geoffrey N., 1977. "Export instability and concentration in the less developed countries : A cross-sectional analysis," Journal of Development Economics, Elsevier, vol. 4(3), pages 279-297, September.
    7. Jonathan Eaton & Gene M. Grossman, 1981. "Tariffs as Insurance: Optimal Commercial Policy When Domestic Markets Are Incomplete," NBER Working Papers 0797, National Bureau of Economic Research, Inc.
    8. Moran, Cristian, 1983. "Export fluctuations and economic growth : An empirical analysis," Journal of Development Economics, Elsevier, vol. 12(1-2), pages 195-218.
    9. Lucas, Robert E B & Stark, Oded, 1985. "Motivations to Remit: Evidence from Botswana," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 901-18, October.
    10. Mario Crucini & Prasad Bidarkota, 1997. "Commodity Prices and the Terms of Trade," Working Papers 98-01, Ohio State University, Department of Economics.
    11. Wong, Chung Ming, 1986. "Models of export instability and empirical tests for less-developed countries," Journal of Development Economics, Elsevier, vol. 20(2), pages 263-285, March.
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