Export Diversification: What’s behind the Hump?

Olivier Cadot (), Celine Carrere () and Strauss-Kahn, Vanessa

No 6590, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The paper explores the evolution of export diversification patterns along the economic development path. Using a large database with 159 countries over 17 years at the HS6 level of disaggregation (4’998 product lines) we look for action at the “intensive” and “extensive” margins (diversification of export values among active product lines and by addition of new product lines respectively) using various export concentration indices and the number of active export lines. We also look at new product introduction as an indicator of “export-entrepreneurship”. We find a hump-shaped pattern of export diversification similar to what Imbs and Wacziarg (2003) found for production and employment. Low and Middle income countries diversify mostly along the extensive margin whereas high income countries diversify along the intensive margin and ultimately re-concentrate their exports towards fewer products. Such hump-shaped pattern is consistent with the conjecture that countries travel across diversification cones as discussed in Schott (2003, 2004) and Xiang (2007).

Keywords: Export diversification; International trade; Latin America (search for similar items in EconPapers)
JEL-codes: F1 O11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-int
Date: 2007-11
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