Understanding Export Diversification: Key Drivers and Policy Implications
This paper identifies key factors that explain the variation in export diversification across countries and over time
Abstract
We identify key factors, from large set of potential determinants, that explain the variation in export diversification across countries and over time using Bayesian Model Averaging (BMA), which addresses model uncertainty and ranks factors in order of importance vis-avis their explanatory power. Our analysis suggests, in order to diversify, policy makers should prioritize human capital accumulation and reduce barriers to trade. Other policy areas include improving quality of institutions and developing the financial sector. For commodity exporters reducing barriers to trade is the most important driver of diversification, followed by improving education outcomes at the secondary level and financial sector development.
This work is part of the ‘Macroeconomics in Low-income countries’ programme
Citation
Rahul Giri, Saad Quayyum and Rujun Yin (2019) Understanding Export Diversification: Key Drivers and Policy Implications. IMF Working Paper No. 19/105
Link
Understanding Export Diversification: Key Drivers and Policy Implications