Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/39991
Authors: 
Starosta de Waldemar, Felipe
Year of Publication: 
2010
Series/Report no.: 
Proceedings of the German Development Economics Conference, Hannover 2010 4
Abstract: 
The empirical U-shaped pattern between product diversification and economic development has been widely examined, but here we analyze the determinants of diversification. We find that a high level of rent-seeking activities has a large impact on the diversification of nations: in countries where rent-seeking is a widespread practice, the number of products being exported will be smaller and its value more concentrated in certain goods. Our analysis embraces a large sample of more than 130 countries between 1995 and 2007, using a highly disaggregated export database comprising 5000 products adopting both diversification indices or the number of new products as measures of diversification. To establish this relationship we use a Generalized Method of Moments estimation, controlling for endogeneity originated from reverse causality, and we also use a negative binomial regression to estimate the impact of rent-seeking on new export products. These empirical predictions contribute to the idea that resources allocated to harm diversification are an important binding constraint for developing countries.
Subjects: 
Product diversification
international trade
economic development
JEL: 
O11
F1
O31
Document Type: 
Conference Paper

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