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Export Diversification and Specialization in South Africa: Extent and Impact

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  • Naude, Wim
  • Rossouw, Riaan

Abstract

Should developing countries focus on diversifying their export basket or should they instead specialize their exports according to their existing comparative advantage? In this paper we attempt to answer this question by reviewing the literature on export diversification and specialization, by investigating the extent of export diversification and specialization in South Africa over the period 1962-2000 and its relationship to GDP per capita. We use a computable general equilibrium (CGE) model to investigate the economy-wide impacts of greater export diversification versus greater export specialization. We find tentative evidence of a U-shaped relationship between per capita GDP and export specialization. Also, Granger causality test suggests that export diversification induces changes in GDP per capita. Our CGE simulations find that export diversification results in higher GDP growth and employment. The main channel for this observation is that greater export diversification results in a more substantial increase in exports (of between 1.28 and 7.03 per cent) than in the case of greater export specialization. We conclude by discussing some policy implications.

Suggested Citation

  • Naude, Wim & Rossouw, Riaan, 2008. "Export Diversification and Specialization in South Africa: Extent and Impact," WIDER Working Paper Series 093, World Institute for Development Economic Research (UNU-WIDER).
  • Handle: RePEc:unu:wpaper:rp2008-93
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    Cited by:

    1. Ogundipe, Adeyemi & Amaghionyeodiwe, Lloyd, 2013. "Transnational Trade In Ecowas: Does Export Content Matter?," MPRA Paper 51617, University Library of Munich, Germany.
    2. Kivilcim Metin Özcan & Nur Sevim Kafali, 2007. "The Structure of the Turkish Banking Sector After the 2000-2001 Crisis: An Empirical Investigation," Working Papers 709, Economic Research Forum, revised 01 Jan 2007.
    3. Nwachukwu, Ifeanyi Ndubuto, 3. "Dynamics Of Agricultural Exports In Sub-Sahara Africa: An Empirical Study Of Rubber And Cocoa From Nigeria," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 2(3).
    4. repec:spr:jsecdv:v:19:y:2017:i:1:d:10.1007_s40847-017-0037-z is not listed on IDEAS

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