Export diversification and economic performance: Evidence from Brazil, China, India and South Africa
Economic Change and Restructuring
World Institute for Development Economics Research, United Nations University, Helsinki, Finland; School of Economics, North-West University, Potchefst, South Africa and Eon Consulting, Midrand, South Africa
In this paper we discuss relationship between export diversity and economic performance, focusing on Brazil, China, India and South Africa (BCIS). Using time data on exports over the period 1962-2000 and Applied General Equilibrium (AGE) models for each country, we note the similarities as well as differences in the patterns of diversification in these countries. We find evidence of a U-shape relationship between per capita income and export specialization in at least China and South Africa, and given that the results from Granger causality testing are inconclusive and not robust with regards to export diversification measures, some preliminary evidence from the results suggest that export diversification Granger causes GDP per capita in Brazil, China and South Africa, but not in India, where it is rather GDP per capita changes that are driving export diversification. From AGE modeling we find that South Africa differs from the other economies in that it is the only case where export diversification has an unambiguously positive impact on economic development while in contrast in Brazil, China and India, it is rather export specialization that is preferred. We show that the manner in which export diversification is obtained may be important: if it is obtained with less of a reduction in traditional exports, the impacts are better (less negative). © 2010 UNU-WIDER.
computer simulation; economic development; economic impact; export; export led development; general equilibrium analysis; Granger causality test; Gross Domestic Product; income distribution; numerical model; specialization; time series; trade performance; Brazil; China; India; South Africa