Export Diversification in Low-Income Countries and Small States: Do Country Size and Income Level Matter?

25 Pages Posted: 14 Jun 2019

See all articles by Dongyeol Lee

Dongyeol Lee

The Bank of Korea; Bank of Korea - Economic Research Institute

Huan Zhang

International Monetary Fund (IMF)

Date Written: May 2019

Abstract

Export structure is less diversified in low-income countries (LICs) and especially small states that face resource constraints and small economic size. This paper explores the potential linkages between export structure and economic growth and its volatility in LICs and small states, using a range of indices of export concentration differing in the coverage of industries. The empirical analysis finds that export diversification may promote economic growth and reduce economic volatility in these countries. Furthermore, the analysis demonstrates that the economic benefits of export diversification differ by country size and income level-there are bigger benefits for relatively larger and poorer countries within the group of LICs and small states.

Keywords: Economic stabilization, Economic growth, Service exports, Terms of trade, Export diversification, Export Diversfication, Growth, Volatility, Low-Income Countries, Small States, per_capita growth, small state, non-small, real GDP

JEL Classification: O11, O14, O20, E01, F1, L31, E52, E63

Suggested Citation

Lee, Dongyeol and Zhang, Huan, Export Diversification in Low-Income Countries and Small States: Do Country Size and Income Level Matter? (May 2019). IMF Working Paper No. 19/118, Available at SSRN: https://ssrn.com/abstract=3404069

Dongyeol Lee (Contact Author)

The Bank of Korea ( email )

39, Namdaemun-ro, Jung-gu
Seoul, 04531
Korea, Republic of (South Korea)

Bank of Korea - Economic Research Institute ( email )

110, 3-Ga, Namdaemunno, Jung-Gu
Seoul 100-794
Korea, Republic of (South Korea)

Huan Zhang

International Monetary Fund (IMF) ( email )

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

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