Diversification, Growth, and Volatility in Asia

33 Pages Posted: 20 Apr 2016

See all articles by Chris Papageorgiou

Chris Papageorgiou

International Monetary Fund (IMF) - Research Department

Nikola Spatafora

World Bank

Ke Wang

International Monetary Fund (IMF)

Date Written: July 28, 2015

Abstract

Economic development critically involves diversification and structural transformation?that is, the continued, dynamic reallocation of resources from less productive to more productive sectors and activities. This paper documents that, over an extended period, developing Asia has on average been particularly successful in diversifying its exports, particularly in comparison with Sub-Saharan Africa. Much of the progress has occurred through diversification along the ?extensive margin,? that is, through entry into completely new products. In addition, developing Asia has on average benefited significantly from quality upgrading, helping it capitalize on already existing comparative advantages. Yet, agricultural and natural resources tend to have lower potential for quality upgrading than manufactures. Therefore, for lower-income ?frontier? countries, diversification into products with longer ?quality ladders? may be a necessary first step before large gains from quality improvement can be reaped.

Keywords: Pro-Poor Growth, Agribusiness & Markets, Economic Theory & Research, Emerging Markets, Environmental Economics & Policies

Suggested Citation

Papageorgiou, Chris and Spatafora, Nikola and Wang, Ke, Diversification, Growth, and Volatility in Asia (July 28, 2015). World Bank Policy Research Working Paper No. 7380. Available at SSRN: https://ssrn.com/abstract=2637111

Chris Papageorgiou (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Nikola Spatafora

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Ke Wang

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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