A Case for Value-Added Exports in the Estimation of Export Diversification in Asia and the Pacific

Pallavi Bajaj (), Kristina Baris (), Patricia Georgina Gonzales (), Christian Regie Jabagat (), Janine Elora Lazatin () and Elaine Tan ()
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Pallavi Bajaj: United Nations Conference on Trade and Development
Kristina Baris: Asian Development Bank
Patricia Georgina Gonzales: Asian Development Bank
Christian Regie Jabagat: Asian Development Bank
Janine Elora Lazatin: Asian Development Bank
Elaine Tan: Asian Development Bank

No 650, ADB Economics Working Paper Series from Asian Development Bank

Abstract: Export diversification, or the breadth of exports of an economy, is increasingly seen as a means of accelerating economic growth, mitigating instability due to price, demand, and exchange rate fluctuations, and stabilizing earnings from exports in the long run. As economies integrate into global and regional value chains, the new fragmented production structures may not be adequately reflected in diversification measurements based on gross exports. This paper develops a new indicator of export diversification based on value added in sectors contributing to exports. For most Asia and the Pacific economies, the gross exports approach underestimates export diversification compared to the value-added approach. Analyzing the trends suggests a strong case for the latter approach to complement the more traditional approach. The relationship between export diversification and growth is complex and is dependent on the diversification indicator and varies by income levels. One general finding is that divergence between diversification in exporting sectors and in sectors contributing to exports narrowed as income levels of economies increased.

Keywords: export; value added; diversification; global value chains (search for similar items in EconPapers)
JEL-codes: C82 F10 F43 F63 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2022-03-07
New Economics Papers: this item is included in nep-ban, nep-int and nep-sea
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