Understanding Export Diversification: Key Drivers and Policy Implications

By Rahul Giri, Saad N Quayyum, Rujun Yin

May 10, 2019

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Rahul Giri, Saad N Quayyum, and Rujun Yin. Understanding Export Diversification: Key Drivers and Policy Implications, (USA: International Monetary Fund, 2019) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Subject: Commodities, Environment, Export diversification, Exports, Human capital, International trade, Labor, Natural resources

Keywords: Achieving diversification, Central Africa, Commodity exporter, Diversification, Diversification index, East Africa, Education, Export diversification, Export product space, Exports, Human capital, Margin diversification, Middle East, Natural resource, Natural Resource Rent, Natural resources, North Africa, Trade, WP

Publication Details

Pages:

29
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2019/105
Stock No:

WPIEA2019105
ISBN:

9781498313087
ISSN:

1018-5941

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