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A Case for Value-Added Exports in the Estimation of Export Diversification in Asia and the Pacific

Author

Listed:
  • Bajaj, Pallavi

    (United Nations Conference on Trade and Development)

  • Baris, Kristina

    (Asian Development Bank)

  • Gonzales, Patricia Georgina

    (Asian Development Bank)

  • Jabagat, Christian Regie

    (Asian Development Bank)

  • Lazatin, Janine Elora

    (Asian Development Bank)

  • Tan, Elaine

    (Asian Development Bank)

Abstract

Export diversification, or the breadth of exports of an economy, is increasingly seen as a means of accelerating economic growth, mitigating instability due to price, demand, and exchange rate fluctuations, and stabilizing earnings from exports in the long run. As economies integrate into global and regional value chains, the new fragmented production structures may not be adequately reflected in diversification measurements based on gross exports. This paper develops a new indicator of export diversification based on value added in sectors contributing to exports. For most Asia and the Pacific economies, the gross exports approach underestimates export diversification compared to the value-added approach. Analyzing the trends suggests a strong case for the latter approach to complement the more traditional approach. The relationship between export diversification and growth is complex and is dependent on the diversification indicator and varies by income levels. One general finding is that divergence between diversification in exporting sectors and in sectors contributing to exports narrowed as income levels of economies increased.

Suggested Citation

  • Bajaj, Pallavi & Baris, Kristina & Gonzales, Patricia Georgina & Jabagat, Christian Regie & Lazatin, Janine Elora & Tan, Elaine, 2022. "A Case for Value-Added Exports in the Estimation of Export Diversification in Asia and the Pacific," ADB Economics Working Paper Series 650, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0650
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    References listed on IDEAS

    as
    1. Zhi Wang & Shang-Jin Wei & Kunfu Zhu, 2013. "Quantifying International Production Sharing at the Bilateral and Sector Levels," NBER Working Papers 19677, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    export; value added; diversification; global value chains;
    All these keywords.

    JEL classification:

    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • F10 - International Economics - - Trade - - - General
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development

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