Export diversification and income differences reconsidered: The extensive product margin in theory and application

Research output: Journal contributionsJournal articlesResearchpeer-review

Authors

  • Karsten Mau

The paper revisits the relationship between GDP per capita and diversification, using classical and more recent trade theory. Three theoretical findings are presented: (i) competitive models yield predictions only for the extensive product margin; (ii) countries continuously diversify their production and exports—a major controversy in the empirical literature; and (iii) causality runs from diversification to GDP per capita, and not the other way around. The theoretical analysis also provides indication for the appropriateness of alternative measures of diversification, and enables estimating the relationship to economic development in a gravity-type parametric specification. Using detailed data on countries’ exports, the case of re-specialization is rejected. Inference of causality reveals some evidence for GDP per capita affecting the level of diversification, but stronger support for diversification affecting GDP per capita. Generally, both variables are highly endogenous as they are both driven by the technology parameters in standard models of economic growth and international trade.

Original languageEnglish
JournalReview of World Economics
Volume152
Issue number2
Pages (from-to)351-381
Number of pages31
ISSN1610-2878
DOIs
Publication statusPublished - 01.05.2016

    Research areas

  • Economic development, Export diversification, Extensive margin, Gravity equation
  • Economics

Recently viewed

Researchers

  1. Isabelle Mahler

Publications

  1. Knowledge on global environmental change within social praxis: what do we know?
  2. Using Reading Strategy Training to Foster Students´ Mathematical Modelling Competencies
  3. From Allegiant to Assertive Citizens
  4. Sol-gel technology for greener and more sustainable antimicrobial textiles that use silica matrices with C, and Ag and ZnO as biocides
  5. Insights into an Action-Oriented Training Program to Promote Sustainable Entrepreneurship
  6. The effectiveness of nudging
  7. Work in Progres Work on Progress
  8. Minimum return guarantees, investment caps, and investment flexibility
  9. Open Access und Open Educational Resources
  10. Linking socio-technical transition studies and organisational change management
  11. Fettflecken untersuchen mit Graphical Analysis
  12. Does Board Composition Influence CSR Reporting?
  13. Linking concepts of change and ecosystem services research: A systematic review
  14. Integrating regional perceptions into climate change adaptation
  15. Where Tasks, Technology, and Textbooks Meet: An Exploratory Analysis of English Language Teachers’ Perceived Affordances of an Intelligent Language Tutoring System
  16. Knowledge acquisition and development in sustainability-oriented small and medium-sized enterprises
  17. An Integrative Framework of Environmental Management Accounting
  18. Burdens, Stresses, Resources and Needs of School Management and Teaching staff during the Corona Pandemic. Results of a qualitative Interview Study at primary and secondary Schools in Hesse
  19. Towards a Relational Materialism
  20. Group membership does not modulate automatic imitation
  21. What workers want: job satisfaction in the U.S.
  22. An Analysis of Methane Mitigation as a Response to Climate Change
  23. On-Board-Diagnose und On-Board-Measurement
  24. A Control-Value Theory Approach
  25. Development perspectives for the application of autonomous, unmanned aerial systems (UASs) in wildlife conservation
  26. How price path characteristics shape investment behavior

Press / Media

  1. Asset Backed Securities