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Trade Diversification, Income, And Growth: What Do We Know?

Date Added: Feb 2010
Format: PDF

Policy interest in export diversification derives largely from the notion that poor countries are excessively reliant on primary commodities in their export and output structures and that they should diversify into activities characterized by technology spillovers and high productivity growth. However, this notion largely rests on the early conjecture of Prebisch (1950) and, more recently, on reduced-form econometrics that has become highly controversial. Academic interest in export diversification is not new, going back at least to Michaely's work (Michaely 1958).