Increasing Export Diversification in Commodity-Exporting Countries: A Theoretical Analysis

Author/Editor:

Dean A. DeRosa

Publication Date:

October 1, 1991

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper draws on the neoclassical theory of international trade to examine the limits of efficient export diversification in low-income, commodity-exporting countries. It demonstrates the fundamental importance of relative factor endowments among countries for determining the commodity composition of international trade flows under both certain and uncertain economic conditions. In recognition of the importance of international financial markets for risk-spreading and allocating resources efficiently under uncertainty, the paper emphasizes the importance of “open” economic policies towards international trade in financial assets as well as goods.

Series:

Working Paper No. 1991/105

Subject:

Comparative advantage Export diversification Exports Natural resources Trade policy

Notes:

Also published in Staff Papers, Vol. 39, No. 3, September 1992.

English

Publication Date:

October 1, 1991

ISBN/ISSN:

9781451947397/1018-5941

Stock No:

WPIEA1051991

Pages:

32

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