Export Basket Research Articles

Structural change and productivity growth in Brazil: where do we stand?

ABSTRACT The aim of this paper is to discuss the evolution of the Brazilian labour productivity in the 1990s and 2000s to shed some light on the resilience of the Brazilian economy to recover growth. Labor productivity growth in Brazil, after showing positive annual rates between 1950 and 1979, became stagnant after 1980. Following McMillan and Rodrik’s (2011) methodology, this paper at first decompose labor productivity growth in the period 1950-2011, according to “structural change” (which is considered growth-enhancing) and “within effect” (which is growth-reducing, if not accompanied by significant structural change while the country is still pursuing its catching-up process). Next, an econometric exercised is presented to explain the determinants of the structural change component of the labour productivity since economic opening in the 1990s. The results show that the stagnation of the Brazilian productivity is explained by the overvaluation trend of the Brazilian currency, the reprimarization of the export basket, the low degree of Brazil’s trade openness and the high real interest rates prevailing in the period.

State Neutrality, Business Elite and the Lack of Export Services Development in Chile: an Exploratory Qualitative Analysis

The process of economic development implies, among other things, the expansion of exports beyond natural resources and towards more knowledge intensive sectors. However, a common situation in developing countries is the lack of an ‘entrepreneurial push’ from economic and political elites in order to diversify such exports. The Chilean economy is not an exception as it is still characterized by an export basket anchored in natural resources, regardless the consensus among society on the importance of diversifying the Chilean economy towards new industrial and service sectors, both beyond and within natural resources. This paper focuses on the causes of the absence of such an ‘entrepreneurial push’ towards export service sector in Chile and, through a qualitative exploratory analysis of elite perceptions, presents the predominant hypothesis among key stakeholders.

Power Trading in South Asia: Some Aspects of Benefits

Of having immense regional capacity of 395,096 MW as of mid-2018, South Asia is gradually emerging as a fulcrum of electricity exchange and powers trading so, bilateral exchanges are occurring, as evident in the noteworthy Bhutan-India power flow of 1,410MW. India and Bangladesh have four historic power trading practices in place and the Power Purchase Agreement of 2014 between Nepal and India, these two countries exchange up to 350 MW of electricity. All these have triggered immense possibilities opening the scope for multilateral power flows. A huge jump from the present total cross-border trading of hardly 2500 MW is very possible. Nepal could potentially be the biggest beneficiary in this game. If harnessed steadily, its power could be sold across South and South East Asia, with wheeling facilities provided by Indian national grids. A Bangladesh–Bhutan–India trilateral hydroelectric power-generation agreement is likely to be signed soon. Energy secretaries of Bangladesh and Nepal have decided to develop hydropower projects in Nepal through government-to-government investment and then export the electricity thus produced to Bangladesh through the Indian transmission system Power trade would change the composition of the export baskets of power exporting countries and help them address their adverse balance of trade and balance of payment. Additional income from power export and an enhanced level of economic activity can be invested in social infrastructure.

Birthplace diversity and 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 countries with higher birthplace diversity by one standard deviation are more economically complex by 0.1 to 0.18 standard deviations above the mean. This holds particularly for diversity among highly educated migrants and for countries at intermediate levels of economic complexity. 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.

Cashew : Export Challenges Ahead

For the first time after independence, India has framed the first agriculture export policy through which the government wants to double agriculture export and double farmers income by 2022. Cashew is the most important product in India’s agriculture export basket which has tremendous export potential. India is one of the largest cashew exporters in the world. In recent times, cashew export sector is facing various challenges that threaten India’s position in the world cashew market.

LEGITIMACY OF GREEN SOLOW MODEL AND ENVIRONMENTAL KUZNETS CURVE: A PANEL ANALYSIS FOR ASIAN COUNTRIES

Legitimate countries try to sustain the economic growth and on other side face the pollutant emissions during the production process. Global warming and climate changes are results of these pollutant emissions. The study estimates the Environmental Kuznets curve hypothesis empirically in the panel of Asian developed and developing countries. The numbers of cross sections are five with time period ranges from 1981 to 2010. The empirical results are obtained by fixed effect method. In addition, dynamic relationship between CO2 emission per capita, energy consumption per capita, export product diversification (Theil index) and economic growth per capita is checked. The value of Theil index suggests that in developed countries export product diversification is elastic whereas it is inelastic in developing countries. It suggests that developed countries export basket has items with less pollutant emissions effect. On other hand, export basket of developing countries still has large pollutant emission items. The energy consumption in industries for production is positively involved in CO2 emission. The GDP per capita is positively involved in CO2 emission whereas, squared GDP per capita involve in reduction of CO2 emission. The signs of GDP and squared GDP per capita provide the evidence of EKC hypothesis. In addition, study checks the validity of Green Solow model in Asian developed and developing countries with five numbers of cross sections. The validity is checked by Mann-Kendall trend test. The results infer that except Singapore, no other country exhibits the initial increasing and then decreasing trend to support the green Solow model. Moreover, graphical representation of Mann-Kendall trend test indicates that GDP or economic growth trend is higher than emission trend in Hong Kong and Singapore.

Economic development and stagnation in Brazil (1950–2011)

Labor productivity growth in Brazil, after showing positive annual rates between 1950 and 1979, became stagnant after 1980. We decompose, calculate and analyze statistical evidence on the Brazilian labor productivity growth in the period 1950–2011, according to “structural change” and “within” components as proposed by McMillan and Rodrik's (2011) methodology. Since it is almost a consensus that the stagnation in the subperiod 1980–1994 is explained by the external debt crisis and chronic inflation rates, we regressed labor productivity growth as well as its two components on several microeconomic and macroeconomic variables in Brazil for the period 1995–2011. The results show that the stagnation of the Brazilian economy in the recent decades is explained by the overvaluation of the Brazilian currency, the reprimarization of the export basket, the low degree of Brazil's trade openness and the high real interest rates prevailing in the period.

ЭКОНОМЕТРИЧЕСКОЕ МОДЕЛИРОВАНИЕ ВЛИЯНИЯ РАСПРОСТРАНЕНИЯ ЗНАНИЙ НА СРАВНИТЕЛЬНЫЕ ПРЕИМУЩЕСТВА РЕГИОНОВ

This study focuses on the sectoral structure of exports of Russian regions and its dynamics. We also explore the reasons for similarities in export portfolios of regions. Despite the differences in geography, climate and capital availability, Russian regions have more similarities than differences in terms of their export baskets. This conclusion is valid for the six economic sectors we examined based on observations from 1998 to 2018. This paper aims to clarify the nature of the relationship between the structure of exports and knowledge diffusion. Our main hypothesis is that knowledge diffusion has a positive impact on the similarity of exports in Russian regions. Using econometric tools, we bring to light the following patterns: first, knowledge diffusion has a positive effect on similarity of regional exports; second, an increase in the distance between Russian regions leads to a decrease in the similarity of their export baskets, while the presence of a common border leads to the opposite; and finally, a growing difference in socio-economic indicators leads to a decrease in the similarity of regions’ export baskets. The research findings could be used to design strategies for development of regional exports.

Machine-learned patterns suggest that diversification drives economic development.

We combine a sequence of machine-learning techniques, together called Principal Smooth-Dynamics Analysis (PriSDA), to identify patterns in the dynamics of complex systems. Here, we deploy this method on the task of automating the development of new theory of economic growth. Traditionally, economic growth is modelled with a few aggregate quantities derived from simplified theoretical models. PriSDA, by contrast, identifies important quantities. Applied to 55 years of data on countries' exports, PriSDA finds that what most distinguishes countries' export baskets is their diversity, with extra weight assigned to more sophisticated products. The weights are consistent with previous measures of product complexity. The second dimension of variation is proficiency in machinery relative to agriculture. PriSDA then infers the dynamics of these two quantities and of per capita income. The inferred model predicts that diversification drives growth in income, that diversified middle-income countries will grow the fastest, and that countries will converge onto intermediate levels of income and specialization. PriSDA is generalizable and may illuminate dynamics of elusive quantities such as diversity and complexity in other natural and social systems.

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.

Структурная трансформация и отраслевая производительность: учет направлений экспорта в индексе экономической сложности

In this study, we develop a new approach to redefine the economic complexity index (see (Hausmann et al., 2011) for the original method). ECI is a relative measure, which evaluates the progress in the structural transformation of a particular economy. While constructing the new index, we not only take into account how complex two economic structures are, which is reflected in the composition of their export baskets, but also how productive are these structures, which is mirrored in the geographical structures of their exports. Countries with more complex economic structures, still export more complex products, while more productive economies export their products to a large variety of markets, including rich economies. We find that some economies, which the traditional approach, by ignoring the fact that most of their exports go to the not-so-rich markets of their geographical neighbors, overestimates by providing a too high position in the ranking, take significantly lower position after the new approach is applied. This result is more consistent with these economies' recent years' growth rates.

Impact of oil exports on growth of the economy of Oman

International trade in crude oil and GDP are often used together in world trade and economy. Crude oil being the most essential commodity plays an important role in the economic development of countries, whether by exports or imports. This article aims to analyse the relationship between Oman's oil exports and its economic growth. The goal is to find out the effect of oil export on Oman's growth and diversification of the export basket. The technique applied is mainly the dynamic OLS model after checking the series for stationarity. The results indicate that oil exports play a significant role in the growth of Oman along with total exports, thus also indicating towards diversification of export basket of Oman.

Latent Trade Diversification and Its Relevance for Macroeconomic Stability

Abstract This paper examines the economic implications of a novel concept of trade diversification—latent diversification. In contrast to traditional measures, latent diversification accounts for potential movements of factors of production into activities where the country has previous exporting experience, hence presenting an additional margin through which countries can respond to shocks. The paper shows that the gap between traditional measures of diversification and latent diversification is sizeable and that latent diversification is in its own right an important determinant of macroeconomic stability. More diversified latent export baskets are associated with lower terms-of-trade volatility and, in turn, lower GDP per capita volatility, even after controlling for the degree of contemporaneous export diversification and other country characteristics.

Chile's Export Diversification since 1960: A Free Market Miracle or Mirage?

ABSTRACTConventional wisdom has proclaimed Chile's recent economic development a ‘free market miracle’. In an examination of Chile's export diversification experience, this article departs from that view. By analysing the dynamics underlying the emergence of the salmon, fruit, forestry and wine sectors in Chile's export basket since the 1960s, the study sheds light on the crucial role of industrial policy in the process of capability accumulation that shapes new industries. The article undertakes a qualitative historical analysis of the scope and nature of policy interventions in each of the four sectors and conducts a quantitative policy evaluation using the difference‐in‐difference method. It finds that public institutions are essential in overcoming market failures inhibiting the emergence of new industries. Specifically, it shows that the government has a key role to play as a catalyst of human capital accumulation, as a venture capitalist, in trade promotion, and in ensuring ‘national’ sector reputation through a strong regulatory and quality control role. By elaborating on the dynamic process of structural transformation and capability accumulation, this article contributes to theoretical debates on the role of vertical policies in the emergence of new competitive sectors, and debates relating to static versus dynamic approaches to comparative advantage.

Distance from core competences and new export survival: Evidence from multi‐product exporters

AbstractWe study the determinants of the survival of new export products of multi‐product firms. We use micro‐level data from Chile to estimate linear fixed‐effects and non‐linear survival models to show that a measure of “distance” between a firm's new export and its previous export basket is a negative and significant determinant of the survival of the new export, especially during its first year. Our interpretation of this finding is that exports further away from firms’ core competences have lower chances of survival in exports since it is more difficult for firms to achieve competitiveness in them. Our results suggest that country‐level diversification, at least through existing firms, should be gradual.

THE ANALYSIS OF EXPORTS PERFORMANCE IN ALGERIA FOR THE PERIOD 1992-2016

The study aims to investigate the export performance in Algeria. For this purpose, the researcher used a descriptive approach to examine how trends in exports, export composition, export concentration, market share, and export volatility have changed in Algeria's plans and reform programs. The study found an improvement in Algeria exports during 1992-2016, but this performance weakened during the more recent years. The export composition showed that consumer products and raw materials represented the bulk of Algeria's total exports with an average share of 91.5%. The share of intermediate and capital goods was low, with a percentage of only 3%. It also showed that the largest part of Algeria's products was exported to Europe and Central Asian and North American countries, with an average share of 86%. The results revealed a lack of diversification in Algeria's exports as the product concentration was on average, 97.2%. The extent of geographic concentration ranged between 61% and 78% in Algeria's exports was also high. The market share of Algeria has improved considerably during the study period as it achieved the highest value in 2011. This expansion is explained by the high integration of Algeria by exporting fuel products in the world market. The extent of export volatility has varied during the study period as it was at its highest level (54.1%) during the period 1992-1995. In contrast, the extent of Algeria's exports was less during 2009-2013 as it was only 19.8%. To improve export performance in Algeria, the government should reduce the concentration in their export products and upgrade the structure of their export basket by including more advanced products (such as intermediate, capital and other manufactured products). Improving the export performance in Algeria can also be achieved by enhancing trade relationships with traditional markets as well as other trading partners. These initiatives can be also helpful in reducing the extent of volatility in Algeria's export earnings.Keywords: Exports Composition, Exports concentration, Market share, Export volatility.JEL Classifications: F100DOI: https://doi.org/10.32479/ijefi.8447

Is Indonesia's growth rate balance-of-payments-constrained? A time-varying estimation approach

This paper analyses the performance of Indonesia's economy since the early 1980s using Thirlwall's balance-of-payments-constrained (BoPC) growth model, estimated in state-space form to take account of the varying nature of the income elasticities of demand for exports and imports. Results indicate that after peaking in the mid 1980s at above 10 percent, Indonesia's BoPC growth rate has declined significantly, to about 3 percent in recent years. This is the result of changes in the three components of this growth rate: the income elasticities of demand for exports and imports, and the growth rate of world income, all three significantly lower. Especially worrisome for Indonesia's future is the decline in the income elasticity of demand for exports, a variable that summarizes the non-price competitiveness of its exports. This is the consequence of the lack of progress in upgrading the export basket and increasing its sophistication, with natural resources and low value-added manufacturing still dominating the country's exports. Focusing on the two income elasticities, the analysis shows that their determinants are variables that proxy the economy's structural changes (for example, the manufacturing employment share) and within-sector productivity growth (for example, complexity of the economy, gross fixed capital formation as a share of GDP).

Impact of Oil Trade on Growth of Oman

International trade in crude oil and GDP are often used together in world trade and economy. Crude oil being the most essential commodity plays an important role in the economic development of countries, whether by exports or imports. This article aims to analyse the relationship between Oman's oil exports and its economic growth. The goal is to find out the effect of oil export on Oman's growth and diversification of the export basket. The technique applied is mainly the dynamic OLS model after checking the series for stationarity. The results indicate that oil exports play a significant role in the growth of Oman along with total exports, thus also indicating towards diversification of export basket of Oman.

DOES EXPORT DIVERSIFICATION MATTER FOR CHINA’S REGIONAL GROWTH?

China has enjoyed high economic growth for more than three decades since the initiative of economic reform in early 1980s. This growth has been driven mainly by labor-intensive export-oriented manufacturing activities. Yet, there are remarkably few empirical studies of the link between export diversification and economic growth. In this paper, the effect of export diversification on economic growth in Chinese provinces in the period 2000–2006 is examined. The findings support cross-country evidence that regions with diversified export baskets enjoy higher economic growth. However, it is found that the growth benefits are linked to diversification of export products, rather than geographical diversification of exports. Further, it is also found that the growth effect and export diversification may have a nonlinear relationship. As such, governments promoting export diversification should distinguish the diversification of export products from that of export destinations. Their policies should also change as regional economies develop.

An Analysis of Trade Specialization in Bangladesh, 1996-2011

Trade specialization has been studied extensively, and many researchers try to explain the patterns of the specialization and different factors that determine it. By using the Revealed Symmetric Comparative Advantage Index and the Galtonian Regression Technique, this study tries to determine the industries with trade specialization and analyze the transformation of the pattern of trade specialization in Bangladesh in the period 1996-2011 to show how the export and import specialization of industries changed and to what extent the pattern of trade specialization in Bangladesh has been transformed during the last sixteen years. Empirical analysis showed that the export of Bangladesh consists mainly of the garment industry, and Bangladesh import products largely belong to the category of commodities for further production and the support of the exporting sector. From the Galtonian regression analysis of export and import specialization, it has been found that the level of export diversification is very low, relatively stable which is confirmed by the low mobility effect. Bangladesh’s export specialization pattern is highly concentrated only in apparel products over the whole study period, and all other sectors contribute with a significantly smaller amount in total export share, but import is more diversified. For the development of the country, it is necessary to diversify its export basket.