What Determines Export Diversification in the Development Process? Empirical Assessment


  • We would like to thank the referee as well as the participants at: the X European Trade Study Group Conference (University of Warsaw), Warsaw International Economic Meeting (University of Warsaw), International Trade Workshop (Staffordshire University) and economic seminar at Universita' Politecnica delle Marche for their valuable comments and suggestions. We are responsible for all the remaining errors. Aleksandra Parteka gratefully acknowledges financial support from Polish Ministry of Science and Higher Education and National Science Centre (Poland) (research grant 2011/01/B/HS4/04759). Previous version of this paper was circulated under the title ‘Export Diversification and Development – Empirical Assessment’ and ‘Determinants of Export Diversification: an Empirical Investigation’.


This paper assesses the role played by country-specific factors as determinants of relative export diversification. Using a panel data set for 60 countries and 20 years (1985–2004), we confirm that even after clearing out differences in income per capita, cross-country variability in the degree of export diversification is significant. In general, apart from per capita income, features influencing the size of accessible markets (domestic and foreign) are the most relevant and robust determinants of the export diversification process. Diversification opportunities grow if countries are large and not located far from economic core areas and when barriers to trade are restricted.