## Proximity and Horizontal Policies: The Backbone of Export Diversification

_IMF Working Papers, March 5, 2021_

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## Bibliographic details
- Authors: Gonzalo Salinas
- Published: March 5, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513571614.001

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### Summary and main findings
- The paper finds a strong statistical connection between horizontal policies and export diversification by making two methodological changes to traditional approaches.
- Using export categories that lead to diversification (for example, manufactures) as dependent variables, and using a gravity-equation regression setting, are the two novel changes.
- Proximity to other economies explains about a third of cross-country heterogeneity in targeted exports.
- Proximity together with horizontal policies explains four fifths of cross-country heterogeneity in targeted exports.
- Australia, Chile, and New Zealand emerge as new role models for diversification policies.

### Methodology
- Dependent variables: export categories that lead to diversification (for example, manufactures).
- Econometric framework: gravity-equation regression setting.
- Novelty: combining targeted export-category dependent variables with a gravity-equation regression to identify links between horizontal policies and diversification.

### Policy implications and recommendations
- Horizontal (economy-wide) policies have a measurable and substantial role in export diversification.
- Proximity to other economies should be considered alongside horizontal policies when designing export-diversification strategies.
- Country examples (Australia, Chile, New Zealand) provide practical role models for diversification policy design.

### Subjects and keywords
- Subjects: Economic sectors, Export diversification, Export performance, Exports, Financial crises, International trade, Trade liberalization, Trade policy
- Keywords: annex table, concentration index, determinants of Economic Complexity Index, determinants of export, East Asia, economic development, economic growth, export basket, export complexity., export concentration index, export country level, export diversification, export group, Export performance, Exports, front matter page, Global, goods export, International trade, NHM export, policy variable, table A.1, target export category, targeted export, Trade liberalization, Trade policy

*Source: Gonzalo Salinas, IMF Working Papers 2021, 064 (2021).*

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_Source: https://www.imf.org/en/publications/wp/issues/2021/03/05/proximity-and-horizontal-policies-the-backbone-of-export-diversification-50141_