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Title:Export diversification and specialization in South Africa: Extent and impact PDF Logo
Authors:Naudé, Wim
Rossouw, Riaan
Issue Date:2008
Series/Report no.:Research paper / UNU-WIDER 2008.93
Abstract:Should developing countries focus on diversifying their export basket or should they instead specialize their exports according to their existing comparative advantage? In this paper we attempt to answer this question by reviewing the literature on export diversification and specialization, by investigating the extent of export diversification and specialization in South Africa over the period 1962-2000 and its relationship to GDP per capita. We use a computable general equilibrium (CGE) model to investigate the economy-wide impacts of greater export diversification versus greater export specialization. We find tentative evidence of a U-shaped relationship between per capita GDP and export specialization. Also, Granger causality test suggests that export diversification induces changes in GDP per capita. Our CGE simulations find that export diversification results in higher GDP growth and employment. The main channel for this observation is that greater export diversification results in a more substantial increase in exports (of between 1.28 and 7.03 per cent) than in the case of greater export specialization. We conclude by discussing some policy implications.
Subjects:exports
diversification
specialization
South Africa
general equilibrium modelling
JEL:F10
F14
O24
O14
O55
ISBN:978-92-9230-147-7
Document Type:Working Paper
Appears in Collections:WIDER Research Papers, United Nations University (UNU)

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