The “S” curve relationship between export diversity and economic size of countries

Abstract

The highly detailed international trade data among all countries in the world during 1971–2000 shows that the kinds of export goods and the logarithmic GDP (gross domestic production) of a country have an S-shaped relationship. This indicates that all countries can be divided into three stages accordingly. First, the small economies always export very few kinds of products as we expect. Second, once the economic size magnitude (log(GDP)) of a country is beyond a threshold, its export diversity may increase dramatically. However, this is not the case for large economies because a ceiling on the export diversity is observed when their logarithmic GDPs are higher than another threshold. This pattern is very stable for different years although the concrete parameters of the fitting sigmoid functions may change with time. In addition, we also discussed other relationships such as import diversity with respect to logarithmic GDP, diversity of exporters with respect to the number of export goods etc.; all of these relationships show S-shaped or power law patterns which can be derived by the “S” curve relations. Although this paper does not explain the origin of the S-shaped curve, it may provide a basic empirical fact and insights for economic diversity.