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Is export diversification or export specialization responsible for economic growth in BRICS countries?

Author

Listed:
  • Sinesipho Siswana

    (Department of Economics, Nelson Mandela University)

  • Andrew Phiri

    (Department of Economics, Nelson Mandela University)

Abstract
Is it export diversification or export specialization that is more useful towards promoting economic growth in the BRICS economies? To answer this query, we estimate a growth model augmented with trade activity to capture the diversification-concentration trade-off with economic growth over the period of 1995 to 2017. Our baseline Fully-Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) regressions confirm a negative effect of diversification on growth whereas concentration has a positive effect on growth. We further estimate panel quantile regressions for the growth specifications and find that i) moderate levels of concentration are best for economic growth ii) diversification adversely affects growth across all quantiles though the effect diminishes as one approaches higher levels of diversification. This points to a semi inverted U-shaped diversification schedule, of which the BRICS countries have crossed their ‘inflexion point’ of development and need to re-specialize their export baskets.

Suggested Citation

  • Sinesipho Siswana & Andrew Phiri, 2019. "Is export diversification or export specialization responsible for economic growth in BRICS countries?," Working Papers 1907, Department of Economics, Nelson Mandela University, revised Sep 2019.
    • Handle: RePEc:mnd:wpaper:1907
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    References listed on IDEAS

    as
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    Cited by:

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    More about this item

    Keywords

    Export specialization; Export diversification; Economic growth; BRICS countries; asymmetries; Quantile regressions.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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