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Is export diversification or export specialization responsible for economic growth in BRICS countries?

Sinesipho Siswana () and Andrew Phiri ()
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Sinesipho Siswana: Department of Economics, Nelson Mandela University

No 1907, Working Papers from Department of Economics, Nelson Mandela University

Abstract: Is it export diversification or export specialization that is more useful towards promoting economic growth in the BRICS economies? To answer this query, we estimate a growth model augmented with trade activity to capture the diversification-concentration trade-off with economic growth over the period of 1995 to 2017. Our baseline Fully-Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) regressions confirm a negative effect of diversification on growth whereas concentration has a positive effect on growth. We further estimate panel quantile regressions for the growth specifications and find that i) moderate levels of concentration are best for economic growth ii) diversification adversely affects growth across all quantiles though the effect diminishes as one approaches higher levels of diversification. This points to a semi inverted U-shaped diversification schedule, of which the BRICS countries have crossed their ‘inflexion point’ of development and need to re-specialize their export baskets.

Keywords: Export specialization; Export diversification; Economic growth; BRICS countries; asymmetries; Quantile regressions. (search for similar items in EconPapers)
JEL-codes: C23 C33 F10 F13 F14 O40 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2019-09, Revised 2019-09
New Economics Papers: this item is included in nep-cis and nep-int
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http://repec.mandela.ac.za/RePEc/mnd/wpaper/paper.1907.pdf First version, 2019 (application/pdf)

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