Can export diversification promote export upgrading? Evidence from an oil-dependent economy

Hazwan Haini, Pang Wei Loon and Pang Li Li

Resources Policy, 2023, vol. 80, issue C

Abstract: This study examines whether export diversification leads to export upgrading in Brunei Darussalam from 1995 to 2019. Many oil-dependent economies have implemented various initiatives to diversify its production structure. Yet not all exports are alike, and exports that are sophisticated provide greater comparative advantages. However, structural upgrading processes induced from diversification take time through the cost discovery mechanism. We begin by constructing an index of export upgrading, export diversification, and export concentration using disaggregated trade data. We employ an autoregressive distributed lag estimator to control for endogeneity and simultaneity. Our results show that export diversification has a positive and significant association with export upgrading in the long run. However, this is insignificant in the short run. Moreover, we find evidence that export diversification positively and significantly affects lower levels of export upgrading processes as opposed to sophisticated exports that are associated with greater technological content. The results imply that the gains from export diversification may only be realised in the long run, which can explain the mixed findings from previous studies and the dynamics of resource-dependent economies. Further policy implications are discussed.

Keywords: Resource curse; Diversification; Export sophistication; Economic development; Oil and gas (search for similar items in EconPapers)
JEL-codes: C33 F21 O47 O53 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301420722007358
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:80:y:2023:i:c:s0301420722007358

DOI: 10.1016/j.resourpol.2022.103292

Access Statistics for this article

Resources Policy is currently edited by R. G. Eggert

More articles in Resources Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().