Export Diversification Research Articles

Стимулювання високотехнологічного експорту як основа стратегії повоєнного відновлення української економіки

The aim of the article is to assess the export activity of Ukraine and determine its role in the conditions of the ongoing war and post-war recovery of the national economy. Economic growth rates are higher in countries that are deeply integrated into global value chains, have a more diversified export structure, and focus on the quality of their own exports. In the pre-war period, Ukrainian exporters had a number of internal (difficulties in accessing financing for the production and sale of export products, low level of production technologies, non-compliance of national products with the technical requirements and standards of the world market, burdensome border crossing procedures, corruption, etc.) and external problems (unstable conditions in foreign markets of raw materials), which negatively affected the results of export activity. A sharp decline in Ukrainian exports during the wartime is caused by restrictions on production, financial, technological, and human resources resulting from the physical destruction of enterprises and logistics infrastructure, the loss of part of the workforce due to an increase in mortality and its outflow abroad, a decrease in income due to an unprecedented decline in business activity and production efficiency, the inability to insure war risks, etc. According to the experience of South Asian countries, which are now leaders in terms of high-tech exports (Hong Kong, Vietnam, Singapore, South Korea), changes in the commodity structure of exports by reducing the volume of raw materials and increasing the share of high-tech goods, as well as IT services, can become the basis for preserving the Ukrainian economy during the war and the post-war recovery, which requires stimulating scientific and technical research and development by increasing investment in innovation areas, the State support for exporters of high value-added products.

Commodity Price Shock and Economic Performance: An Empirical Evidence for Nigeria

Interconnected economies in the world commodity market may cause external shocks that slow indigenous countries' economic growth and development. Nigeria is a commodity-dependent country, hence, commodity price shocks have harmed its institutional and fiscal framework for economic growth, despite efforts to save the economy. It is crucial to assess the effects of local and external commodity price volatility shocks on emerging nations' growth since they plunge millions into abject poverty. It is in this context, this study examines commodity price shock and economic performance with an empirical evidence for Nigeria. This study employs Multivariate Generalized Autoregressive Conditional Heteroscedasticity (MGARCH) to capture both gradual and unexpected changes in commodity price shock in Nigeria from 1980Q1 – 2021Q1. The results showed positive volatility shock effect on each variable caused by its past innovations while parameters of the independent variables indicated innovations of shock effects on economic performance. Also exports of other non-oil commodities can reduce dependence of real exchange rate on world commodity prices by having more diversified exports. The study recommends for diversification towards agricultural production to stabilize the real exchange rate of Naira from world commodity price shocks. Finally, Nigeria can protect her competitiveness from fluctuations in world commodity prices by being more opened to external trade.

Export Diversification and Free Trade Agreements

This research paper examines the effect of Free Trade Agreements (FTAs) on export diversification, focusing on Peruvian exports to five countries in the Asia Pacific region: China, Japan, South Korea, Thailand, and Singapore. By employing regression models with control variables, the study investigates the outcomes of FTAs on export patterns. The findings reveal that the FTA yielded two primary effects: general and lagged. The general effect of the FTA was observed in the case of Peruvian exports to China and Korea, whereby a greater variety of exported goods became available. On the other hand, the FTA signed with Japan, Thailand, and Singapore resulted in a gradual reduction in the concentration of exported items over time. These findings underscore the importance of comprehending the multifaceted impacts of FTAs on export diversification and emphasize the need for a nuanced understanding of how trade agreements influence export dynamics across diverse markets.

Export Diversification, Financial Sector Development and Economic Growth: Empirical Evidence from West African Sub-Region

In this study, we explored the influence of trade diversification and financial sector development on economic growth of ten West African countries for the period 2007 to 2020. The study employed the panel autoregressive distributed lag (ARDL) model since some of the variables were stationary at level while others were stationary at first difference, fully modified ordinary least squares approach of estimation, and Granger causality test. The findings of the study from the ARDL model indicated that export diversification exerts a negative effect on economic growth both in the short-run and in the long-run, though such effect were insignificant. The effect of financial sector development on growth is observed to be positive and significant in the short-run, and negative and significant in the long-run. From the robustness check, the FMOLS result indicated that export diversification exerted a negative and significant effect on growth; while the effect of financial development is positive but insignificant. The Granger causality test revealed that a unidirectional causality flow between export diversification and economic growth, with the former causing the latter. The implication of this findings is that countries within the West African region should specialize in some export products in order to boost efficiency in production and the resultant effect on greater export and export earnings.

ANALYSIS OF THE STATE AND DYNAMICS OF UKRAINE'S FOREIGN TRADE IN FRUIT AND VEGETABLE PRODUCTS UNDER THE CONDITIONS OF A FULL-SCALE INVASION WITH THE PROVISIONS OF THE FTA+ WITH THE EU

ANALYSIS OF THE STATE AND DYNAMICS OF UKRAINE'S FOREIGN TRADE IN FRUIT AND VEGETABLE PRODUCTS UNDER THE CONDITIONS OF A FULL-SCALE INVASION WITH THE PROVISIONS OF THE FTA+ WITH THE EU

Diversification in resource-rich Africa, 1999–2019

We survey the performance of Sub-Saharan Africa's resource-dependent economies from 1999 to 2019, a period covering the commodity price supercycle, which generated enormous rents for natural resource producers. We show that despite high overall growth rates, these states failed to convert their windfalls into broader forms of development: their economies diversified more slowly than resource-poor countries in Sub-Saharan Africa; their economies became less complex; their low institutional quality regressed further; and they achieved slower progress on human development than their resource-poor counterparts. Case studies of the top three diversifiers—Botswana, Zambia, and Nigeria—underscore the challenges of diversification. We suggest two broad reasons for these patterns. First, economic diversification, especially export diversification, is intrinsically difficult for low-and-middle income resource-dependent countries, due to both Dutch Disease effects and the isolated product spaces of the oil, gas, and minerals sectors. Second, diversification in resource-dependent states is sensitive to institutional quality, yet institutional quality is sticky and typically constrained by political interests that are hostile to reforms. This implies that the development challenges of oil, gas, and mineral dependent states over the coming decades will be significant and difficult to surmount. We suggest a more modest set of goals focused on diversifying into related activities in the extractives value chain and unrelated sectors in the domestic economy, as well as narrowly-focused efforts to boost non-resource export industries.

Nexus between resource policy, renewable energy policy and export diversification: Asymmetric study of environment quality towards sustainable development

This study examines the environmental performance of the United Arab Emirates (UAE) towards its sustainable development amidst its heavy endowment with natural resources and export diversification. The UAE is among the economies that depend on both export diversification and natural resources for their sustainable economic development. The two mentioned indices (export diversification and natural resources) have been proven to be among the drivers of carbon emissions. Notwithstanding, the UAE has a desert environment with nearly continuous sunlight capable of generating and boosting its renewable energy development. With this potential, it is crucial to create a green energy strategy since renewable energy sources are gaining popularity as alternatives to conventional energy sources. Natural resources and export diversification have garnered mixed reactions in their role towards environmental development. While some researchers report that they induce degradation, others suggest that they mitigate environmental damage. Also, empirically, studies have found renewables such as hydroelectricity, wind and geothermal energy capable of moderating and mitigating the negative impact of carbon emissions on the environment. In this study, data from 1990 to 2019 is analyzed using the nonlinear autoregressive distributed lag (NARDL) and dynamic ordinary least squares (DOLS) scientific methods. The variables of interest are natural resources, export diversification and renewable energy. Findings from NARDL show that export diversification, natural resources and economic growth negatively impact the environment in the UAE by inducing carbon emissions. Specifically, positive and negative shocks of export diversification, natural resources and economic growth to carbon emissions increase and decrease carbon emissions, while positive and negative shocks of renewable energy to carbon emissions decrease and increase carbon emissions. This indicates that the UAE has the potential to achieve its carbon neutrality target with a renewable energy policy.

Research on India-China agriculture trade dynamics: A comparative advantage analysis.

This paper presents a comprehensive analysis of the agriculture trade dynamic between India and China from 2002-2021. It employed the Revealed Comparative Advantage (RCA) and Revealed Symmetric Comparative Advantage (RSCA) indices and various statistical analyses to assess the trade performance and provide an enhanced comprehension of the specialization pattern. The study has selected 45 agricultural commodities, categorized into seven sections according to the HS Nomenclature 2017. The findings revealed that India boasts a more diversified export portfolio compared to China, with a more significant number of agriculture chapters demonstrating a comparative advantage. Conversely, China's export basket is more concentrated, featuring fewer chapters with a comparative advantage but higher values of RCA and RSCA. The paper also identified the prospective areas for agriculture-trade cooperation and collaboration between the two countries and put forward recommendations. This research aims to offer valuable insights for policymakers, researchers, and traders to enhance bilateral ties and mutual benefits in the agriculture sector.

Export diversification and disaggregate energy consumption in BRICS economies: Does environmental degradation matter?

The role of exports as a catalyst for income growth necessitates the utilization of energy resources in manufacturing industries. Consequently, major exporting nations are embracing a dual approach, employing both renewable and non-renewable energy sources, to enhance export promotion while addressing environmental concerns. In this study, we examine the intricate relationship between export diversification and disaggregated energy consumption, specifically focusing on renewable and non-renewable energy, within the framework of the BRICS countries from 1990 to 2020. Notably, our investigation contributes significantly to the understanding of the moderating influence of environmental degradation, employing the Markov Chain Monte Carlo (MCMC) panel quantile regression method. Our findings reveal that initially, export diversification exerts a negative impact on renewable energy consumption. However, as countries attain a comparative advantage in diversification, this relationship transitions into a positive correlation. Additionally, we observe a significant positive association between export diversification and non-renewable energy consumption, which subsequently turns negative once the level of comparative advantage is reached. Moreover, we uncover that CO2 emissions, serving as a proxy for environmental degradation, partially moderate the link between export diversification and renewable energy consumption, while fully moderating the relationship with non-renewable energy consumption. Furthermore, we identify heterogeneous effects of outward foreign direct investment (FDI), innovation, human capital, and institutional quality on the disaggregated levels of energy consumption across the BRICS economies. In light of these findings, we propose the adoption of a prudent approach towards energy resource utilization, taking into account environmental safety considerations within the BRICS countries.

Pakistan’s export potential assessment at intensive and extensive margins

PurposeThis study aims to estimate Pakistan’s export potential in new and existing export products, as well as their potential destination markets.Design/methodology/approachThis study uses a nonparametric approach based on demand, supply and easiness factors for estimating export potential at disaggregated product and destination levels.FindingsA significant number of new export products (extensive margin) and existing products (intensive margin) are identified that have export potential. The estimated unrealized export potential at extensive margins is $2bn and at intensive margins is $5bn. The range of new products included value-added products, semifinished products and intermediate products. Surprisingly, there is high potential to diversify in China and export existing products more intensively in the EU. Moreover, the potential at extensive margins is regional diverse compared to intensive margins.Research limitations/implicationsThe methodology used in this paper only provides export potential for short-to-medium term period because the global demand conditions are varying. Also, the mineral and resource-based products cannot be included in the analysis because their exports are heavily dependent on the availability of natural resources.Practical implicationsThe findings have important policy implications in terms of providing guidelines for government policies related to industrial development, international trade and export promotion at the product and destination level. Overall, the study reveals that traditional sectors lack room for product diversification. As the existing export incentives favor major industries. To foster diversification, existing incentives must be redesigned to cover new products or sectors. Moreover, China has the greatest potential for product diversification, while Europe has the greatest potential to export current products more intensively. Further research is needed to simulate trade policy scenarios and estimate demand, supply and ease factors in export potential.Originality/valueThis study provides a unique perspective on export potential assessment at disaggregated product and destination levels, reinforcing the importance of redesigning trade policies and export incentives separately for export diversification.

Investigating the load capacity curve (LCC) hypothesis in leading emitter economies: Role of clean energy and energy security for sustainable development

Our beneficent environment supplies us with ecosystem benefits, but these services have a maximum amount to be consumed before biocapacity shortage results. We need to put more faith in the replacements for ecosystem services if we want to return biocapacity to its previous state (i.e., biocapacity excess). Nevertheless, the demand for ecosystem services is rising as significant economies diversify their export bases. This raises the question of energy security because fossil fuels are running out owing to constant usage. The leading emitters (i.e., the USA and China) must rely on energy sources that are green and secure and refrain from the excessive use of ecosystem services if they hope to keep their pledges of reaching the Sustainable Development Goals (SDGs) by 2030. The current study examines the economic complexity index (ECI), energy security, and renewable energy affect the load capacity curve (LCC) hypothesis in this paper. We employ the data from 1998 to 2018 and the panel data methodologies CS-ARDL and PMG-ARDL to arrive at our empirical conclusions. The empirical results show that among the top 10 emitters in the world, the LCC hypothesis is only valid in the short and long run but validates the U-shaped relationship between GDP and LCF. The CS-ARDL results also show that export diversification, green energy, and energy security improve environmental quality across the analyzed regions. The PMG-ARDL robustness check results point to a similar conclusion. The top ten emitters must continue to work to switch from fossil fuels to clean and secure energy sources. It is strongly advised to shift in stages because doing so will less impact export diversification.

Does the impact of financial development reinforce sustainability ecological footprint? Fresh evidence from middle and high-income economies

In this age of globalization, every country tries to achieve sustainable growth by handling environmental challenges. In the last few decades, massive human activities have been fulfilled by destroying natural resources, and ecological footprint is an excellent way to assess it. Thus, the present study delves into the role of financial development and ecological footprint by controlling urbanization, export diversification, and industrialization. A selected dataset covering 1990 to 2020, containing 43 middle income and 45 high income countries, has been compiled due to data availability. The empirical outcomes were deduced using the Panel Quantile Regression due to outliers and non-normality in the data set. The results demonstrate that financial development suggests the inverted U-shaped curve to determine the ecological footprint in the 25th and 50th quantiles. It shows that a sophisticated financial development declines ecological footprint. Further analysis explores that in middle income countries, only China and higher income countries, Australia, Denmark, Italy, Germany, Japan, France, Korea(R), Netherlands, Luxembourg, Singapore, Switzerland, Spain, the United Kingdom, and the United States have achieved higher financial development, which started declining their ecological footprint. In addition, Industrialization increases the ecological footprint, while export diversification and urbanization have mixed effects across quantiles and countries. This study suggests that the remaining countries should focus on improving their financial development sector to reduce their ecological footprint.

Can outward FDI promote export diversification for emerging economies? Firm-level evidence from China

Recent studies have highlighted the importance of export diversification in facilitating emerging economies’ structural change and economic development. This study aims at investigating whether outward foreign direct investment (OFDI) can promote export diversification. Using a firm-product-level dataset, this study investigates empirically the impact of China's OFDI conducted by exporting firms on their export diversification both at product-level and destination-level. By employing propensity score matching (PSM) techniques and differences-in-differences (DID) analysis, this study finds that China's OFDI has a positive and statistically significant impact on promoting China's diversification of export basket, and the promotion effects vary upon different motivations of OFDI. A dynamic effect test shows that the promotion effects of OFDI are significant for several consecutive years after outward investment was made. In addition, this study also finds that the promotion effects mainly come from optimised organisational structure and improved business performance of the OFDI firms.

INTERNATIONAL COMPETITIVENESS OF THE POULTRY SECTOR IN POLAND OVER THE LAST 20 YEARS

The research aimed to assess the changes that have occurred in the Polish export and import of poultry and the industry’s competitiveness. The analysis covered the years 2003 and 2022 and was carried out based on Eurostat data. The analysis included, among others, the value and balance of turnover, geographical structure, and selected competitiveness indicators. The leading importers of Polish poultry are the European Union countries. Poland has a comparative advantage mainly in the case of the EU market, which is confirmed by the increasing values of the TC and SI indicators and the decreasing HHI indicator. The obtained SI index values show that Poland had an apparent specialization in the export of poultry sector products to the markets of Great Britain, Bulgaria, Ireland, and Malta. The downward trend of the HHI index indicates the diversification of exports, which is a positive phenomenon as it provides the Polish poultry sector with stable revenues despite emerging turbulence. The reason for such a large increase in exports to EU countries was essentially the abolition of customs duties, attractive prices, and good quality of Polish products. Despite the substantial price advantages of Polish products and the favorable structure of comparative advantage indexes, poultry producers in Poland should constantly monitor the market environment. Attractively priced products offered by Ukraine, Brazil, and Thailand may harm the Polish export of these products in the coming years.

Trade Horizons: A Comprehensive Study of Determinants Shaping Export Diversification in Pakistan

The present study aims at highlighting the determinants and degree diversification of export in Pakistan. The index of export’s diversification by the United Nations Conference on Trade and Development is used to calculate the degree of export diversification. Furthermore, using time series data from 1995 to 2022, present study examines the factors that influence export diversification. There are very few studies that address estimating and determinants in the context of Pakistan. To check the unit root problem Augmented Dickey Fuller test is used. The Auto Regressive Distributive Lag method is used in this study to observe long-term relationships in the underlying variables. The regression results indicate that official exchange rates, economic globalization, and foreign direct investment negatively affect export diversification in Pakistan. While, gross fixed capital formation, world GDP per capita, term of trade, and political stability positively affect diversification of exports in the case of Pakistan.

The influence of foreign direct investments on the economic development of South Caucasus countries

A nation's pace of economic growth in the South Caucasus region is directly influenced by the volume of foreign direct investment (FDI) it gets. This research project examines the effects of foreign direct investment (FDI) on economic growth and stability, with a focus on the three nations of Armenia, Azerbaijan, and Georgia. This research seeks to understand three important aspects: the trends in FDI influx; the industries that draw the highest concentrations of FDI; and the societal consequences of FDI. Examining these three crucial facets of the whole is the aim of this study. The goal of this study is to look at the trends in foreign direct investment (FDI), with an emphasis on the South Caucasus region's growing prominence as a desirable destination for financial investments. To achieve the objectives of this study, we will. Numerous various elements, such as its advantageous geographic position, an abundance of natural resources, and the formation of prospective markets, may be ascribed to its preeminence. The industries with the largest amounts of foreign direct investment (FDI) are also examined in this research, with an emphasis on the manufacturing, infrastructure, and energy sectors' critical roles in promoting economic growth. In this last section of the study, the socioeconomic effects of foreign direct investment (FDI) are examined. The creation of new job possibilities, the diffusion of recently produced technology, and the diversification of exports are some of these outcomes. One of the main topics of this conversation is how these effects contribute to raising the local quality of life and lowering the incidence of poverty. The aim of this research is to examine the many aspects of foreign direct investment (FDI) and how it affects the economic development of countries in the South Caucasus area of the globe. The purpose of this project is to provide useful information on the opportunities and challenges these nations face in their efforts to draw in and use foreign investments in order to achieve sustainable growth and prosperity. The data that will be offered will come from a range of sources, such as focus groups, questionnaires, and interviews.

Foreign direct investment, human capital and export diversification in Africa: A panel smooth transition regression (PSTR) model analysis

This paper investigates the role of local human capital in facilitating the export diversification improvement effect of foreign direct investment (FDI) in African countries. To this end, we use a panel smooth transition regression (PSTR) model which is able to deal with the heterogeneity issue associated with the cross-country data. Based on a sample of 30 African countries over the period 1996–2019, the results show that there is a minimum threshold of human capital beyond which the export diversification enhancing effect of FDI is unlocked in African countries. In other words, only countries located above a certain threshold of human capital benefit from the positive effect of FDI on export diversification. These results suggest that policymakers in African countries should focus on improving the conditions for acquiring local human capital (education and health) in order to extract economic gains from FDI.

Impact of Export Diversification on Economic Growth in Sub-Saharan Africa (SSA)

This study investigated the impact of export diversification on the economic growth of countries in Sub-Saharan African (SSA). Trade Data are gathered from the World Integrated Trade Solution (WITS), and UN Comtrade database, using a 6-digit level range of the Standard International Trade Classification (SITC) and the Harmonised System (HS) for the Countries. Export diversification Indices data are proxies from the Herfindahl Hirschman Index (HHI) which represents the level of export product diversification for all forty-eight (48) SSA Countries between 1995 and 2020. The Panel Autoregressive Distributed Lagged Model (P-ARDL) was applied in the study. Other analysis including correlation analysis, multicollinearity, and Unit Root tests were used to achieve the objective of the study. The findings showed that export diversification has not really benefitted the SSA Countries; also, exporting raw materials and other primary products does not benefit the region, and therefore, the countries should continue leveraging on the potential of diversifying their exports and exploring sectors such as the manufacturing to attain more economic gains. To achieve export gains, oil/minerals products should be exported as finished products, not as raw materials, especially, from those nations that are resources endowed. These raw materials should be best used domestically to aid production into finished/refined products for subsequent exports.

Determinants of Export Diversification: The Case of Russian Regions

ABSTRACT The hydrocarbon sector accounts for 50% of Russian exports, leading to high commodity price volatility risks for the economy. Prior literature emphasizes the role of export diversification in development and in hedging external shocks. We investigate factors affecting regional export diversification, applying method of moments quantile regression. We devise two export diversification measures, using Theil and Herfindahl indices. Our empirical findings demonstrate that innovations spur export diversification in industrial regions, while small and medium enterprises diversify exports in industrial and non-resource regions. Natural resource extraction enforces regional exports concentration. We develop policy implications for Russian regional policymakers considering the specialization of regional economies.

The effect of technological intensity on international trade

This paper aims to show the impact of technological intensity (R&D intensity) on trade. Using a detailed product-level dataset of 118 countries from 1988 to 2006 and the Poisson pseudo-maximum-likelihood (PPML) estimator, this paper provides robust evidence that technological intensity promotes exports mainly through increasing the variety of exports. More specifically, a 1-percentage point increase in the country’s technological intensity promotes the variety of exported products by around 0.12% on average across all 15 sectors. In addition, total exports and the variety of exported products increase are higher in technology-intensive sectors.