Diversification In Countries Research Articles

Economic diversification and human development in Europe

Economic diversification is recognized in literature as a strong determinant of economic development. The relationship between economic diversification and human development (social welfare), however, is not conclusive. High level of diversification can improve social welfare by providing a large range of alternatives to economic agents. On the contrary, it can also increase complexity of the decision making and hence negatively affecting social welfare. Using data for 20 European countries from 1996 to 2010, we found evidence for positive welfare effects of economic diversification in Central and Eastern European Countries suggesting that diversification is especially important for social welfare in transition economies. Our results hold for all three types of diversification indices (related, unrelated and overall diversification) and are robust to the selection of industries and lag specifications. For the full sample, variety only affects human development after a significant lag. More specifically, in the long run, overall variety improves social welfare while related variety reduces it. A negative relationship between related variety and human development is attributable to obsolescence of skills when new sectors replace existing ones. Such is not the case with unrelated variety as sectors are by definition unrelated to each other and therefore new sectors are less likely to replace old ones.

On the income diversification and bank market power nexus in the MENA countries: Evidence from a GMM panel-VAR approach

This paper investigates the dynamic causal relationship between revenue diversification and bank market power using a broad sample of commercial banks from 17 Middle Eastern and North African (MENA) countries over the period 1993–2014. To do so, we employ the panel vector autoregression (PVAR) approach in a generalized method of moments (GMM) framework. Moreover, we use the impulse response functions (IRFs) tool to better understand the reaction of bank market power aftershocks on revenue diversification and vice-versa. Finally, we supplement our analysis by the forecast error variance decompositions (FEVds) of our variables. Overall, the results show that the level of bank market power declines in response to positive revenue diversification shocks. Conversely, banks with a higher level of market power get more involved in non-traditional activities.

Does Birthplace Diversity Affect Economic Complexity? Cross-Country Evidence

We empirically investigate the relationship between a country's economic complexity and the diversity in the birthplaces of its immigrants. Our cross-country analysis suggests that birthplace diversity is strongly and positively associated with economic complexity. This holds particularly for diversity among highly educated migrants and for countries at intermediate levels of economic complexity. The results are robust to accounting for previous trends in birthplace diversity as well as to using alternatives diversity measures. We address endogeneity concerns by instrumenting diversity through predicted stocks from a pseudo-gravity model as well as from a standard shift-share approach. Finally, we provide evidence suggesting that birthplace diversity boosts economic complexity by increasing the diversification of the host country's export basket.

Existe-t-il un lien entre le regime de change et la diversification des exportations dans les pays de la CEDEAO?

Le choix des régimes de change demeure un sujet important mais controversé dans les pays en voie de développement qui restent ouvert au reste du monde et dont les exportations sont tributaires des produits primaires. L ' objectif de ce papier est d ' analyser l ' effet du régime de change sur la diversification des exportations des pays de la CEDEAO. Pour ce faire, nous avons adopté une investigation empirique basée sur une régression d ' un modèle linéaire en données de panel constitué de 10 pays de la CEDEAO, sur la période 1990 à 2014, avec la technique d ' estimation des IV-2SLS. Nos résultats indiquent principalement que le régime de change fixe est significativement favorable à la diversification des exportations dans les pays de la CEDEAO. Au regard de ces résultats, pour améliorer la diversification des exportations, les gouvernements de ces pays doivent entreprendre des politiques destinées à maintenir la stabilité de leurs monnaies nationales vis-à-vis des monnaies étrangères à travers une politique de change appropriée.

What Drives Successful Economic Diversification in Resource-Rich Countries?

The ‘resource curse’ is often understood to imply poor growth in the non-resource sectors of the economy, but research into the diversification performance of resource-rich countries is limited. This paper surveys recent evidence and identifies empirical patterns in the economic diversification of resource-rich countries. Diversification is measured using the growth of per capita non-resource (manufacturing and services) sectors in domestic and export markets, which has a cleaner interpretation than competing measures. This measure is used to evaluate the long-term diversification of countries that started off as resource-dependent, and to rank countries according to their performance. We then identify policy-relevant correlates of diversification at the national level, including the acquisition of human capital, public and intellectual capital, and firm dynamism. More resource-dependent countries appear to perform worse on measures of human capital and intellectual capital, but more resource-abundant countries perform better on public capital and human capital accumulation. We examine the mechanisms behind diversification performance through in-depth case studies of Oman, Laos and Indonesia, and conclude by identifying policy lessons and future research directions.

Parámetros para la transición a un nuevo modelo de Pueblos Mágicos. El caso de Loreto, Baja California Sur

El programa Pueblos Mágicos es una estrategia de política pública del turismo en México que busca fomentar la diversificación de la oferta turística tradicional, a una que reconozca los atributos únicos y simbólicos de localidades que han visto en el turismo una oportunidad de desarrollo económico. El presente trabajo muestra el estudio de caso del Pueblo Mágico de Loreto, Baja California Sur, México, y los resultados de la evaluación del 2015 para la renovación de su nombramiento dentro de esa categoría turística. Se parte de la configuración de una imagen situacional de la operatividad del programa en un entorno local y sus implicaciones para la percepción del turista a través de estrategias de análisis de macrodatos (BigData). El propósito del trabajo es ofrecer una apreciación de la transición de un modelo tradicional de gestión del desarrollo turístico de pueblos mágicos, a uno basado en la maximización de la experiencia turística. El nuevo modelo se propone como la mejor alternativa de los pueblos mágicos para aumentar los índices de competitividad en el turismo nacional.

What do we know about export diversification in oil-producing countries?

Oil-exporting countries are often advised to diversify their economies, yet surprisingly little is known about how this can be done. Research on this issue has been constrained by missing and inconsistent data, selection bias, and the use of uninformative measures of diversification. This paper uses a novel measure of export concentration from the IMF to describe diversification trends between 1962 and 2010 among the 38 largest oil producers. It documents three empirical patterns: a rising gap in export diversification between oil-producing states and non-oil states; the heightened concentration of exports in most oil and mineral producing states from 1980 to 2010; and the heterogeneous performances of the oil producers over the long run. Four striking patterns stand out: the oil exporters have developed the most narrowly-specialized economies in the global market, making them uniquely vulnerable to price shocks; among the oil exporters, the African states have the poorest diversification record; successful diversification is broadly associated with lower levels of oil wealth, which is consistent with a Dutch Disease effect; and success is not strongly associated with population, government effectiveness or democratic accountability.

Export Diversification in Low-Income Countries and Small States: Do Country Size and Income Level Matter?

Export structure is less diversified in low-income countries (LICs) and especially small states that face resource constraints and small economic size. This paper explores the potential linkages between export structure and economic growth and its volatility in LICs and small states, using a range of indices of export concentration differing in the coverage of industries. The empirical analysis finds that export diversification may promote economic growth and reduce economic volatility in these countries. Furthermore, the analysis demonstrates that the economic benefits of export diversification differ by country size and income level—there are bigger benefits for relatively larger and poorer countries within the group of LICs and small states.

Domestic Credit and Export Diversification: Africa from a Global Perspective

ABSTRACTAs open economies, African countries need to diversify their exports for economic transformation, sustained growth, and development. Meanwhile, there has been increasing importance of development financing. Following the discussion of theoretical issues on the importance of domestic credit as a potential instrument for overcoming the liquidity constraint of developing countries, as in the case of Africa, this paper empirically explores the determinants of export diversification, with particular attention to domestic credit. The estimation is based on a five-year panel regression analysis for the 1962–2010 period involving 80 countries around the world, of which 62 are developing and 29 African countries, using as covariates variables traditionally viewed as affecting export diversification. System GMM estimates provide robust evidence supporting the importance of domestic credit for African countries, while its role in other countries seems rather marginal. In addition, human capital in the form of schooling, governance as measured by constraint on the chief executive of government, and being land-locked, all exert significant effects, as anticipated, on export diversification among African countries. However, except for governance, appropriately controlling for the interactive effect of domestic credit with ‘Africa’ yields generally insignificant impacts of these variables, together with domestic credit, on export diversification in non-African countries. These results point to the dominant role of domestic credit in Africa vis-à-vis other countries globally.

Export Diversification in Low-Income Countries and Small States: Do Country Size and Income Level Matter?

Export structure is less diversified in low-income countries (LICs) and especially small states that face resource constraints and small economic size. This paper explores the potential linkages between export structure and economic growth and its volatility in LICs and small states, using a range of indices of export concentration differing in the coverage of industries. The empirical analysis finds that export diversification may promote economic growth and reduce economic volatility in these countries. Furthermore, the analysis demonstrates that the economic benefits of export diversification differ by country size and income level—there are bigger benefits for relatively larger and poorer countries within the group of LICs and small states.

Does Birthplace Diversity Affect Economic Complexity? Cross-Country Evidence

We empirically investigate the relationship between a country’s economic complexity and the diversity in the birthplaces of its immigrants. Our cross-country analysis suggests that birthplace diversity is strongly and positively associated with economic complexity. This holds particularly for diversity among highly educated migrants and for countries at intermediate levels of economic complexity. The results are robust to accounting for previous trends in birthplace diversity as well as to using alternatives diversity measures. We address endogeneity concerns by instrumenting diversity through predicted stocks from a pseudo-gravity model as well as from a standard shift-share approach. Finally, we provide evidence suggesting that birthplace diversity boosts economic complexity by increasing the diversification of the host country’s export basket.

Export Diversification in Low-Income Countries and Small States: Do Country Size and Income Level Matter?

Export structure is less diversified in low-income countries (LICs) and especially small states that face resource constraints and small economic size. This paper explores the potential linkages between export structure and economic growth and its volatility in LICs and small states, using a range of indices of export concentration differing in the coverage of industries. The empirical analysis finds that export diversification may promote economic growth and reduce economic volatility in these countries. Furthermore, the analysis demonstrates that the economic benefits of export diversification differ by country size and income level-there are bigger benefits for relatively larger and poorer countries within the group of LICs and small states.

Oil windfalls and export diversification in oil-producing countries: Evidence from oil booms

This paper examines the factors behind export diversification in oil countries. Specifically, we investigate the impact of oil booms on export diversification through an empirical framework. The paper finds that economy's export structure before the oil boom determines whether oil windfalls might affect the diversification process. Thus, an oil boom negatively affects export diversification only if countries initially exhibit low levels of diversification. In countries with a high level of diversification before the boom, an oil boom has no impact on diversification. These results are based on a large sample of 134 countries, and are robust to various sensitivity analyses. They are corroborated with data from the manufacturing sector which show that oil booms only reduce diversification in countries with a small manufacturing sector prior to the boom.

Africa in the Modern Model of the World Order: a Powerful Player or an Outsider?

The article analyses the transfiguration of Africa’s position in the emerging new model of world economic development. The author emphasizes that until recently Africa was assigned the role of an “outsider” of the world economy. The transition of developed countries to a postindustrial and innovative development model has further exacerbated the lagging behind of the countries of the region from the advanced directions of the economy. Other negative factors that affected the development of African economies in the second decade of the 21st century include the high dependence of the African economy on commodity exports, the slowdown in China’s growth, the socio-economic consequences of the so-called “Arab spring”, primarily the destruction of Libya, and the continuation of old and the emergence of new conflicts in a number of African states. Despite numerous and often successful attempts by external forces to keep Africa as an object within the world economy and politics, the continent is increasingly becoming an active “subject” in international relations, and its development in the coming decades may, in our view, change its position in a new model of world development. Beginning in the 2030s, Africa, according to the forecasts, including those made at the Institute of African Studies of the Russian Academy of Sciences, will turn into the most important and almost unique global strategic reserve of sources of raw materials within the framework of the “Coming (New) Production Revolution” – NPR, Next (in other documents New) Production Revolution. The African continent today occupies the leading positions in the world precisely for those commodities that have no analogues and are vital for the development of defense and innovative technologies of the 21st century. Other important factors in the accelerated development of Africa are the quantitative and qualitative growth of the continent’s labor potential, the expansion of consumption in the African domestic markets, the economic diversification in a number countries of the continent by means of increasing the share of services and industry in GDP, and a significant improvement in the business climate as a result of improved investment legislation and the gradual stabilization of domestic political of the situation. Besides the increase in financial revenues in various forms, regional integration, (including a continental free trade zone), will be a key to accelerating economic growth in the African continent, whichwill allow for joint and more effective use of the potentials of individual African states. Modern Africa is a dynamically growing market of labor force, consumer goods, investment, modern technologies, high technology machinery products. The author anticipates in the foreseeable future the realization of a scenario of gradual evolvement of a joined pan-African pole of global significance.

Income Diversification in Low Income Sub-Saharan African Countries’ Commercial Banks: A “Blessing” or “Curse”?

Abstract Dynamics in economic trend and banks’ creditors’ expectation have directed banks to search the innovative means of income generation. It is with this view that this study examines the relationship between the income diversification and financial performance of banks in SSA low income countries. A panel data of 1,280 observations were extracted from the financial profile of 160 commercial banks from 19 purposively selected countries from 2009 to 2016. The findings from the empirical analysis indicate that non-interest income accounts for 95% of operating income in Low Income countries’ commercial banking sector. Also, it was found that income diversification in SSA banks enhanced financial performance as affirmed by the finance theory because both interest and non-interest income sources are indeed blessings as they increase the financial performance significantly. Therefore, low income SSA countries’ commercial banks are urged to strive to ensure proper investment with their income diversification so that better performance of their economies is enhanced.

Sustainability winners and losers in business-biased cocoa sustainability programmes in West Africa

ABSTRACTIn cocoa farming forestland is a production factor. Cocoa planting is easiest and production costs are lowest in tropical forest. Historically, therefore, once forestland has been exhausted in a given geographical area planters tend to diversify into other production systems to avoid the poverty (induced by increasing factor cost) of post-forest cultivation. In modern times however cocoa planters exist in a value chain and post-forest diversification could threaten multinational companies relying on rural planters for their raw material. In 2014 ten of the world’s largest chocolate multinationals combined, with more than $500 million in funding, to introduce a cocoa sustainability scheme called CocoaAction. In principle, CocoaAction and similar sustainability schemes sponsored by western multinational chocolate companies are interventions to empower cocoa planters and planting communities in West African countries. But in practice, as this article will show, these schemes are a response to diminishing returns in cocoa-producing communities and the prospect of diversification, and the resulting projection of a shortage in raw material. There are signs that diversification away from cocoa will be beneficial to cocoa planters and their communities. Cocoa sustainability schemes are therefore designed for the benefit of multinational chocolate companies and at the expense of diversification in West African countries.

Trade Diversification, Sophistication and Economic Growth in Middle Income Countries

Trade Diversification, Sophistication and Economic Growth in Middle Income Countries

Oil Price Collapse and Firm Leverage in Resource-Dependent Countries

This study examines the financial channel between oil price volatility and the resource curse using firm-level data. A collapse in oil prices adversely affects firm borrowing in resource-dependent countries. However, unlike in non-resource-dependent countries where just the resource sector is harmed, both resource and non-resource firms are affected in resource-dependent countries in an oil price collapse. We also find evidence of a flight to quality in lending, implying that the decline in leverage can partly be attributed to a reduction in the credit supply. Our results suggest that oil price volatility operates via the financial channel to impede economic diversification in resource-dependent countries.

Driving force and resistance: Network feature in oil trade

This article examines the international crude oil trade and the international petroleum trade through econometric analysis and complex network analysis, focusing on the aspects of the driving forces and resistances for the oil trade and competitive or cooperative relationships among countries. The crude oil trade network and the petroleum trade network are constructed. Positional and role analysis reveals that countries can be divided into five positions in the crude oil trade network and twenty-five positions in the petroleum trade network. The relationships among countries within or between positions are discussed and recognized as competitive or cooperative. The bilateral oil trade analysis shows that various factors within countries have influence on bilateral trade volume. The analysis also implies that restrictions on trade partner selection due to geographical resistance forces neighboring oil-importing countries to choose similar oil-exporting countries, which corresponds with the results of the complex network analysis. The complex network analysis shows that the countries in the same position belong to the same region. Furthermore, the analysis results imply that the diversification in petroleum-exporting countries reduces the supply disruption risk for importing countries.

Sustainable Economic Cooperation between Korea and the Middle East in Times of Lower Oil Prices

A global oil price decline since the second half of 2014 has negatively impacted the economies of GCC countries, which heavily depend on the oil and gas sector. This led to a decline in trade surpluses and undermined current account balances, resulting in a slowdown of economic growth in these countries. GCC countries are carrying out several policies, as they face slowing economic growth, deepening budget deficits, diminishing foreign investment and shrinking construction project markets due to lower oil prices. In response, a new cooperation framework is required to strengthen bilateral ties for shared growth. First, industrial cooperation should be reinforced to expand economic diversification and job creation in GCC countries. Second, energy security is one of the most significant rationales for bilateral cooperation between Korea and the Middle East, since Korea imports more than 60% of the oil it uses from GCC countries. Third, investment cooperation should be strengthened to facilitate joint investment in the region, including joint ventures. Fourth, institutional cooperation between governments is needed to share experiences and know-how obtained in the process of Korea's institutional reforms in the fields of tax, subsidies, privatization and FDI. Civil servant exchange programs will also contribute to deepening mutual understanding in the bilateral economic partnership.