Commodity diversification and export performance: a comparative study of Asian developing countries
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PhD Seminar (Econ)
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There has been renewed emphasis on the potential benefits of diversifying the commodity composition of exports in order to promote export expansion. However, standard trade theory predicts that countries should focus on pursuing comparative advantages rather than diversification. This paper studies the export performance of developing Asian economies using panel data for the period 1976–2016. The methodology involves estimating export equations for total non-oil exports and product subcategories. Commodity diversification is measured using the Herfindahl-Hirschman and Theil indexes. The autoregressive distributed lag technique is used to estimate both short-run and long-run effects. The results suggest that export concentration has a positive impact on the growth of total exports and exports of each subcategory. The impact is statistically significant in all cases other than exports within global production networks. The magnitude of the impact varies for product categories, casting doubt on the results of previous studies that have focused on aggregate exports. Supply-side factors appear to be more important than external demand in explaining inter-country differences.
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