Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/325853 
Authors: 
Year of Publication: 
2025
Publisher: 
ZBW – Leibniz Information Centre for Economics, Kiel, Hamburg
Abstract: 
This note introduces a Weighted Composite Diversification Index (WCDI) for resource-dependent economies that integrates fiscal, trade, and output diversification into a single measure, weighted by their relative economic size. Unlike existing indices, the WCDI endogenizes weights according to the macroeconomic structure: fiscal diversification is weighted by government size, trade diversification by export dependence, and output diversification by domestic demand as a share of GDP. To reflect the vulnerabilities of resource-dependent economies, the WCDI incorporates a penalty term that penalizes resource shares within each subindex, providing a context-sensitive gauge of diversification.
Subjects: 
economic diversification
composite index
endogenous weights
entropy
penalty term
resource dependence
JEL: 
C43
Q32
O57
Document Type: 
Working Paper

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