By Richard Newfarmer, William Shaw, Peter Walkenhorst
Because the Nineteen Fifties whilst nations turned involved that specialization in basic items might bring about regular falls within the buying energy of basic exports and gradual development, diversifying out of fundamental items into manufactures has been a huge coverage target of constructing nations. certainly, due to the fact that point, constructing international locations typically became extra various, yet many low source of revenue international locations stay depending on a slender variety of basic items. New questions bearing on export diversification have emerged within the fresh literature and with very important coverage implications: Is export diversification a normal structural consequence of the expansion technique itself, or can international locations speed up progress via lively awareness to diversifying exports? What are the most constraints that hinder international locations from diversifying is it industry mess ups that bring about deepest underinvestment in efforts to arrive new export markets or is it linked to different industry disasters? What regulations are most fitted for nations to advertise diversification and will governments search to stimulate export items with specific features? This publication explores new considering and proof approximately export diversification, and elaborates on regulations to advertise diversification. The papers during this booklet are written as brief, coverage targeted chapters that digest usually longer, extra educational papers in order to cause them to available to a bigger coverage and non-technical viewers. In that experience, it's a coverage primer: what export diversification can and can't do for progress, and the way to make it occur.
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Extra info for Breaking Into New Markets: Emerging Lessons for Export Diversification
The incentives regime. A key challenge for policy makers is ensuring that domestic resources are channeled to their most productive activities. If private investors can make more money by investing in highly protected local markets, they will do so, and opportunities to invest in servicing markets abroad will be lost. Creating a modern incentive framework that spurs national competitiveness requires careful analysis to ensure that land, labor, capital, and technology are moving to sectors in which the country has a long-term capacity to compete and to the most productive firms within sectors.
Thus, policy measures that create a bias against exports of existing key products may be undermining opportunities for new exports. For example, an export tax on a raw material or intermediate export, designed to support exports of the finished product, may actually act to constrain export diversification by limiting the flow of information from overseas markets as well as the experience of exporting. Similarly, taxing existing exports to fund an export promotion agency may not be appropriate. Macroeconomic factors could also play an important role in the high death rates afflicting exports from low-income countries.
Even though time series information points to the predominance of the intensive margin in export growth, the main action at the extensive margin is the sale of existing products to new geographic markets—an approach that low-income countries have barely explored. The potential for further geographic diversification is enormous, given how few markets these exporters have actually exploited. Brenton and Newfarmer (chapter 6 in this book) derive an index of export market penetration (IEMP) that measures the extent to which a country is actually exploiting the market opportunities from its existing set of export products.
Breaking Into New Markets: Emerging Lessons for Export Diversification by Richard Newfarmer, William Shaw, Peter Walkenhorst