Understanding Export Diversification: Key Drivers and Policy Implications

Rahul Giri, Saad Quayyum and Rujun Yin

No 2019/105, IMF Working Papers from International Monetary Fund

Abstract: We identify key factors, from large set of potential determinants, that explain the variation in export diversification across countries and over time using Bayesian Model Averaging (BMA), which addresses model uncertainty and ranks factors in order of importance vis-a-vis their explanatory power. Our analysis suggests, in order to diversify, policy makers should prioritize human capital accumulation and reduce barriers to trade. Other policy areas include improving quality of institutions and developing the financial sector. For commodity exporters reducing barriers to trade is the most important driver of diversification, followed by improving education outcomes at the secondary level and financial sector development.

Keywords: WP; diversification index; commodity exporter; natural resource; Diversification; Education; Trade; Natural Resource Rent; export product space; margin diversification; achieving diversification; Export diversification; Natural resources; Exports; Human capital; Middle East; North Africa; East Africa; Central Africa (search for similar items in EconPapers)
Pages: 29
Date: 2019-05-10
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Citations: View citations in EconPapers (23)

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