Export Diversification: What's behind the Hump?

TLDR

The paper explores how export diversification evolves along the economic development path. The study analyzes 156 countries over 19 years of HS6 product data to examine changes at both intensive and extensive margins. The analysis reveals a hump‑shaped export diversification trajectory, with reconcentration mainly along the extensive margin, aligning with the diversification‑cone hypothesis.

Abstract

The paper explores the evolution of export diversification patterns along the economic development path. Using a large database with 156 countries over 19 years at the HS6 level of disaggregation (4,991 product lines), we look for action at the intensive and extensive margins. We find a hump-shaped pattern of export diversification similar to what Imbs and Wacziarg (2003) found for production. Diversification and subsequent reconcentration take place mostly along the extensive margin. This hump-shaped pattern is consistent with the conjecture that countries travel across diversification cones, as discussed in Schott (2003, 2004) and Xiang (2007).