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Growth Volatility and Export Diversity in OIC Countries

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  • Salman Syed Ali

    (The Islamic Research and Teaching Institute (IRTI))

Abstract

While exports contribute to economic growth through expanding the market, a narrow export base can increase the volatility of this growth. Many OIC member countries face the problem of low diversity of exports. This paper measures the impact of export diversity on the volatility of growth in the OIC member countries using a new data set of trade flows at 4-digit STIC level issued by IMF. It finds that one standard deviation increase in export diversity reduces the volatility of GDP growth by about 17.2 percent for the OIC countries. In the group of less-developed countries and in the group of oil-exporting countries, the intensive margin of diversification is more important than extensive margin diversification for stability of growth.

Suggested Citation

  • Salman Syed Ali, 2016. "Growth Volatility and Export Diversity in OIC Countries," Working Papers 1437-4, The Islamic Research and Teaching Institute (IRTI).
    • Handle: RePEc:ris:irtiwp:1437_004
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    References listed on IDEAS

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    1. Mona Haddad & Jamus Jerome Lim & Cosimo Pancaro & Christian Saborowski, 2013. "Trade openness reduces growth volatility when countries are well diversified," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 46(2), pages 765-790, May.
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    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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