Export diversification across industries and space: do CIS countries diversify enough?
Oleksandr Shepotylo ()
No 20, Discussion Papers from Kyiv School of Economics
Despite the importance of industrial and geographical diversification of exports, the literature says little about what a “normal” level of diversification is. This paper takes a step in this direction and develops a methodology to measure a normal level of diversification along industry and space dimensions. The degree of export diversification is computed conditional on country characteristics and bilateral trade costs. The methodology combines several approaches that recently received attention in the trade literature. First, an industry-level gravity model of exports is estimated using a two-stage estimation procedure that accounts for a sample-selection bias and firm-level heterogeneity. Second, the Hausman-Taylor method is applied for a large panel of countries. Finally, the trade projections are generated out-of-sample. The methodology is applied to measure the degree of export diversification of the CIS countries. In terms of export potential, the results demonstrate substantial deviations of trade from the levels predicted by the gravity model. All CIS countries except Georgia lag behind the region leaders in terms of the degree of export diversification. In particular, the CIS countries extensively engaged in the export of raw materials have the most concentrated export structure among all the transition countries in terms of their industrial composition. In terms of geographical diversification, Belarus has the least diversified exports among all transition countries.
Keywords: Gravity model; trade potential; trade policy analysis; diversification (search for similar items in EconPapers)
JEL-codes: F12 F14 F17 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
Note: Under review in Journal of Comparative Economics
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (2) Track citations by RSS feed
Downloads: (external link)
http://repec.kse.org.ua/pdf/KSE_dp20.pdf October 2009 (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kse:dpaper:20
Access Statistics for this paper
More papers in Discussion Papers from Kyiv School of Economics Contact information at EDIRC.
Series data maintained by Iryna Sobetska ().