Export Diversification Research Articles

The aptness of import-led growth hypothesis for sustainable development in South Asia: Do energy utilization and natural resources matter?

In recent years, the escalating trade activities (imports and exports) have spurred a growing body of research on their linkages with economic progress and sustainability. However, the impacts of imports and export diversification on sustainable economic growth have been rarely explored. This paper aims to fill this gap by exploring the role of import product diversification in the sustainable economic performance of South Asian countries. More precisely, this paper introduces the export-led growth hypothesis and explores the role of import product diversification, natural resources, and human capital for sustainable economic growth. Empirically, this paper uses data from 1995 to 2020 with 9 South Asian economies and runs advanced panel cointegration techniques along with long-run estimation techniques robust to endogeneity, cross-sectional dependence, autocorrelation, and other panel data problems. The outcomes display a significant correlation between import product diversification, natural resources, and sustainable development. The findings can provide insights to formulate efficient import diversification strategies for sustainable growth, especially in developing countries.

Oil Exporting Countries: Analysis of Economic Growth Opportunities Through Export Diversification in a Low-Carbon World

Oil Exporting Countries: Analysis of Economic Growth Opportunities Through Export Diversification in a Low-Carbon World

Intensive and extensive margins of India's agricultural trade: implications for export diversification and development

PurposeThis paper aims to analyze relative contribution of intensive margin (IM) and extensive margin (EM) to growth in India's agricultural exports for the period 2001 to 2020. It also analyses the determinants of IM and EMs through a standard gravity model.Design/methodology/approachThe study uses export data from United Nations Comtrade, which is accessed through World Integrated Trade Solution (WITS) software. Data for the period 2001 to 2020 were compiled for analysis using the Harmonized System (HS) of commodity classification system at the six-digit level. This study decomposed the contribution of IM and EM in the growth of Indian agricultural trade by using Hummels and Klenow's approach. After performing the export decomposition analysis, the authors analyze the factors influencing IM and EM by using the Tobit regression model and Poisson pseudo-maximum-likelihood (PPML) method of estimation.FindingsThe EM grew at 1.24% per annum, while the intensive margin (IM) increased by 0.23%. The contribution of growth at the EM increased from 58.8% in 2001 to 70.2% in 2020. Export growth along the IM was relatively high for animal products and agricultural raw materials, while growth at the EM was an important contributor to the export growth of horticultural and processed agricultural products. There was a positive and significant effect of the free trade agreement (FTA) on export margins.Research limitations/implicationsMore disaggregated commodity-specific studies on value chain analysis would provide valuable insights into the issues hindering exports and realizing the untapped export potential.Originality/valueThere is a scarcity of holistic and recent studies illustrating the role of IM and EMs in agricultural trade growth, covering a large number of commodities and geographies associated with Indian agricultural trade. The study would be helpful to the stakeholders in facilitating informed policy decisions.

Surges in participation in global value chains: Drivers and macroeconomic impacts in sub‐Saharan Africa

AbstractThis article proposes a cross‐country examination of the drivers and impacts of episodes of surges in countries' participation in international value chains based on event analysis previously used in the empirical literature in studies on export surges or GDP growth accelerations. Using a large sample of developing countries over the period 1990–2018, and relying on the EORA database, the article offers three main results. First, the ‘surges’ are not common, with only 11 episodes recorded in sub‐Saharan Africa over the past three decades. Second, strong FDI inflows and governance quality precede the occurrence of these ‘surges’, while protracted real exchange rate under‐valuations appear to nurture these surges. Third, once they occur, these ‘surges’ are transformative: they are associated with higher real per capita GDP growth, rapid industrialization, stronger diversification, and sophistication of exports, faster poverty reduction and higher urbanisation rate.

Explaining regional productivity difference by export variety: evidence from South Korea

ABSTRACT Regional productivity differences and their determinants have long been key issues for regional researchers and policymakers. This study considers regional export variety as a factor determining regional productivity differences. Using a panel dataset covering 16 South Korean regions from 2000 to 2015, we find that export variety in South Korea accounts for 28.1% of cross-region productivity differences and 47.6% of within-region productivity growth. Export varieties are important in determining the cross-region differences and time-series variations in productivity. This study highlights the importance of export variety as a mechanism by which trade affects regional productivity.

Finance and export diversifications Nexus in Russian regions: Role of trade globalization and regional potential

We investigate if financial development (FD) can reduce the export concentration in regional context, corroborating the role of the World Trade Organization (WTO) membership, sanctions and investment potential. Given the considerable heterogeneity in data across regions and over time, we apply the Method of Moments Quantile Regression (MMQR) to analyze panel time-series data from 2009 to 2019. Our finding shows that bank credit disbursement as a proxy of FD drives export diversification in all quantiles (q10-q90), where the role of FD is pronounced at middle to higher quantiles. Besides, the impact of financial development on trade diversification is profound in the regions with higher business potential compared to the lower business potential. We affirm that the adaption of WTO membership elevates trade diversification through promoting competitiveness and providing nascent exporting sectors opportunities to grow. Surprisingly, the economic sanctions imposed in 2014 promoted Russian regional trade diversification. We provided several practical policy implications.

한국의 대브라질 수출의 주요 특성에 관한 연구

Purpose - The Korean economy has been growing rapidly with Five-Year Economic Development Plans since the 1960s. It is generally accepted that foreign trade has been a key factor in the rapid growth of the economy. Initially, the growth of Korean exports was concentrated in a small number of countries. Over time, this high concentration became a threat to the stable growth of the Korean economy. This was the main reason why the need for Korean export diversification emerged.
 Design/Methodology/Approach - Most analyses of Korea's foreign trade by Korean researchers have focused on total exports and important countries. On the other hand, there are not many studies on other small and medium-sized countries. With the recent publication of several papers on Korea's exports to Brazil, it is now possible to examine the characteristics of Korean exports to the Brazilian market as a part of diversification of exports.
 Findings - Integrating four recent papers on Korean exports to Brazil, Chapter 3 discusses their main characteristics; the process of Korean penetration into the Brazilian market, the changes in export trends from Korea to Brazil, the relationship between Korean exports to Brazil, and the Brazilian macroeconomic policy/situation, as well as others.
 Research Implications - Despite the limitations of analyzing only one country, Brazil, this paper not only sheds new light on various characteristics of Korean exports to the Brazilian market, but also suggests new approaches and analytical methods for future research on Korea's foreign trade and export diversification.

Finding the right products for export diversification

AbstractThe Ricardian comparative advantage model suggests doing what you are best at. Meanwhile, many development experiences resulted in producing the impossible. Do the two prescriptions lead to an antagonism that the industrial policy must side by one? Or can industrial policy consider the current comparative advantage while aiming for significant changes in the export basket? This paper answers yes by suggesting a path to transformation through the tracks of current comparative advantage. I use the Product Space network to define the two attributes of a product: New products closer to the existing comparative advantage are easier to include in the export basket. On the other hand, central products in the core of the product space might be far from the export basket, but once added, they contribute more to the transformation and further diversification. Hence, a trade‐off exists between the proximity of a new product to the current export basket and its contribution to further diversification and transformation. I offer industrial policymakers to use a combination of product nearness and centrality. A policymaker seeking a gradual and secure transformation can prioritize nearness, while centrality can be given greater weight for rapid transformations.

The role of FDI in structural transformation in Morocco (1995-2022)

In the general context of Morocco's New Development Model (NDM), where the policy of territorial attractiveness requires all its credentials, and more specifically within the framework of the regional declination of the Industrial Acceleration Plan (IAP), the issue of the structural transformation (ST) of the Moroccan economy is highly topical and of great interest to the Kingdom. This article examines, under external constraints and international openness, ST through the relationship between Foreign Direct Investment (FDI) and the diversification and sophistication of Moroccan exports, over the period from 1995 to 2022. After outlining the theoretical foundations of such a relationship, curiously neglected in the literature, it was specified and estimated by two ARDL (Auto Regressive Distributed Lag) models. The latter, supported by the cointegration bounds test highlighted the existence of a long-term link between FDI and export diversification on the one hand, and export sophistication on the other. However, the results showed a negative influence of FDI on the diversification of Moroccan exports. This negative influence was more significant on export sophistication. Consequently, during the study period, FDI did not play the desired role in the Moroccan economy's ST. It did not contribute to the enhancement of its productive structure, particularly its export structure, which suffered from a chronic double handicap: a low degree of diversification coupled with a lack of sophistication. The Moroccan economy has not reached the level of development required to leverage export diversification and sophistication in its ST.

Old Firms and New Export Flows: Does Experience Increase Survival?

In this paper we present new empirical evidence on the relationship between exporting experience and the duration of exports at the firm-product-destination level. We find that the direct effect of experience on export flow survival is negative. However, when we include interactions between experience and firm export diversification measures, this effect becomes positive. This suggests that more experienced firms launch more risky export flows which increases the probability of failure of any individual product-destination pairing.

Structural change and export diversification: A comparison of CARICOM’s position

This paper presents an analysis of structural transformation with respect to the CARICOM region’s export sophistication and diversification dynamics. Trends in the data indicate that CARICOM, in relation to other country groups, has the lowest number of active export lines. The region also has a low number of commodities with comparative advantage, and an almost negligible number of highly sophisticated exports. The factors affecting export diversification were also evaluated in relation to resource and factor endowments, the regulatory environment and the degree of technical progress. The overall results, from a global perspective, indicate that countries which are technically advanced tend to have a higher degree of export diversification while resource reliant economies are shown to be less diversified. In terms of CARICOM, structural factors and technical progress significantly explain diversification, however as the ease of doing business improves, these countries tend to become more specialized therefore highlighting the tendency to focus on sectors in which they are relatively strong given their factor endowments.

Long-Term Impact of Inflation and Macroeconomic Variables on Foreign Exchange Reserves in the Organization of Islamic Corporation

This study examines the long-term influence of inflation variables, Gross Domestic Product (GDP), exports, imports, and remittance receipts in 7 countries of the Organization of Islamic Cooperation (OIC). This research is expected to contribute to OIC countries related to increasing foreign exchange reserves through inflation control, increasing export diversification, decreasing imports, and increasing remittances while still paying attention to people working abroad. Thus, it can improve the economic level of the OIC country and support international peace and security and protect the holy places of Muslims.

Financial development as a new determinant of energy diversification: The role of natural capital and structural changes in Australia

This paper investigates the relationship between financial development and energy diversification for Australian economy by considering natural capital, structural changes, economic growth, and export diversification as additional determinants of energy diversification demand function. The bootstrapping ARDL cointegration approach is applied for examining cointegration relationship between energy diversification and its determinants by considering presence of structural break stems in the series. Our empirical analysis reveals that financial development affects energy diversification positively. Natural capital is positively linked with energy diversification. Structural changes have favourable effect on energy diversification. Economic growth declines energy diversification. The relationship between export diversification and energy diversification is negative. Financial development and energy diversification have a nonlinear relationship between with an inverted-U shaped. The bootstrapping ARDL Granger causality analysis reveals the presence of feedback effect between financial development and energy diversification. This empirical analysis provides new policy insights for Australian policy makers using financial development as economic tool to boost up energy diversification.

Free trade and carbon emissions revisited: The asymmetric impacts of trade diversification and trade openness

AbstractIn the context of trade protectionism impacting economic and environmental sustainability, a more comprehensive understanding of the impact of trade on carbon emissions is critical to economic and environmental sustainability. Existing literature mainly explores the impact of trade on carbon emissions from the perspective of trade openness, neglecting the perspectives of trade diversification and trade direction. This study aims to fill this gap by investigating the impact of trade openness (measured by trade volume, import, and export), and trade diversification (measured by import diversification and export diversification) on carbon emissions based on data from OECD and G20 countries between 1997 and 2019. The study further explores the heterogeneity, asymmetry, and mediation effects. The results demonstrate that (i) the impact of trade on carbon emissions is heterogeneous, with trade openness leads to an increase in carbon emissions, while trade diversification leads to a reduction in carbon emissions. Moreover, import diversification has the strongest effect on reducing carbon emissions. (ii) The impact of trade openness on carbon emissions is asymmetry. Trade openness increases carbon emissions at 10%–50% quantile levels and reduces carbon emissions at 80%–90% quantile levels. However, the impact of trade diversification on carbon emissions is consistent. (iii) The impact of trade openness on carbon emissions is mediated by technology effect and structural effect. On one hand, trade openness leads to an increase in carbon emissions by the industrial structure. On the other hand, it contributes to the reduction of carbon emissions by technological progress. These findings could serve to better understand the complexity of free trade's impact on economic and environmental sustainability.

The Policy Environment for Climate Vulnerability on Trade Competitiveness and Export Diversification in Tanzania’s Rice Value Chain

The Policy Environment for Climate Vulnerability on Trade Competitiveness and Export Diversification in Tanzania’s Rice Value Chain

Export profitability and firm R&D: on China's export diversification under trade war

China has become the world's largest export economy and the Sino-US trade war since 2017 has brought about serious implications for its foreign trade. To mitigate the effect of the trade war, China has tried to diversify exports from the US to other major trade partners. This paper aims to study the impact of the trade war on the export profitability of Chinese manufacturing firms and examine the role of firm R&D activities in their export diversification process. It is found that under the trade war, firm export profitability with intensive exports to the US declined, but the negative shock is less potent for firms with more R&D activities. In addition, the resilience of R&D-intensive firms stems from two distinctive abilities, i.e., the ability to attract new customers in different alternative markets and the ability to optimize the composition of market niches.

Export diversification, CEO compensation and CEO pay-performance sensitivity: lesson from china

Export diversification, CEO compensation and CEO pay-performance sensitivity: lesson from china

Economic diversification as a factor of sustainable development: A case of Azerbaijan

In modern conditions, the one-sidedness in the economy of Azerbaijan makes it necessary to accelerate the diversification process of the country’s economy. From this point of view, the development of the non-oil sector in the country presents the main priority of the government’s economic policy in Azerbaijan. The purpose of the study is to investigate ways of ensuring the diversification of the national industries in Azerbaijan, which aims to move to a new economic growth model in modern conditions. The study analyzes the economy’s current state and export diversification level in Azerbaijan using the Herfindahl-Hirshman index. As a result of the analysis, the level of diversification in Azerbaijan’s economy and exports was found to be very low (in 2021, the Herfindahl-Hirshman index was 0.23 for the economy and 0.79 for exports). The findings indicate that cooperation between the state and business plays a significant role in increasing the diversification of the economy following the goals of sustainable development of Azerbaijan. On the other hand, it helps stimulate entrepreneurship development in the non-oil sector. One of the ways to solve existing problems in this area is to create Eximbanks to increase the country’s export capabilities of non-oil products. The study offers recommendations to speed up the process of diversification of the economy in Azerbaijan and increase its efficiency.

Matrix completion of world trade: An analysis of interpretability through Shapley values

AbstractEconomic complexity and machine learning have recently become popular approaches for analysing international trade. However, for effective use of machine learning in relation to economic complexity and policymaking, it is important to understand what are the key features for predictions. In this framework, this article addresses the issue of the interpretability of results obtained with a machine learning technique—namely, matrix completion—when applied to economic complexity, specifically in predicting revealed comparative advantages (RCAs) of countries in different product categories. Shapley values are used to measure the role each country plays in predicting the RCAs of other countries. Countries relevant for prediction may differ from countries whose RCA values are similar to those of the country of interest when a standard similarity measure such as cosine similarity is used. We demonstrate the usefulness of our approach to identifying comparable countries by focussing our analysis on export diversification into complex goods of selected European countries.

Deteksi Penyakit Layu Fusarium pada Pisang-Pisang Lokal di Pandeglang

Detection of Fusarium wilt on Local Bananas in Pandeglang
 Fusarium wilt of bananas or Panama disease, caused by Tropical Race4 (TR4), threatens the global banana industry. In Indonesia, the disease devastated Cavendish, an export variety, and many local bananas, such as Pisang Raja, Kepok, and Barangan. Nonetheless, TR4 incidence is unknown in many parts of Indonesia. This study aimed to detect TR4 in local bananas from Pandeglang, the most banana-produced area in Banten Province. A survey was conducted in nine Kecamatan i.e., Banjar, Cadasari, Jiput, Labuan, and Menes. In total, 13 banana accessions showed symptoms of fusarium wilt. Symptomatic pseudostem samples were plated on potato dextrose agar. The monosporic culture was derived from isolation and used for morphological identification and DNA extraction. Based on the morphological characteristics of Fusarium, 27 strains members of 3 species complexes were identified, i.e., F. cugenangense, F. foetens dan F. oxysporum (Fusarium oxysporum species complex; FOSC), F. equiseti dan F. incarnatum (Fusarium incarnatum-equiseti species complex) dan F. solani (Fusarium solani species complex, currently named as Neocosmospora). Molecular detection of TR4 was done using duplex PCR of translation elongation factor-1α (Tef-1α) and TR4 primer specific, giving positive results only on TR4 strains, members of FOSC. This study enhances our knowledge of the spreading of TR4 in an unidentified area in Indonesia. Many of the local bananas in Pandeglang is susceptible to TR4, thus threaten banana cultivation in this area. Further study on the molecular analysis using more genes will give insight into the expanding genetic diversity of Fusarium causing wilt in Banana in the Indonesian collection.