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Structural transformation and quality ladders: Evidence from the new Theil's decomposition

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  • Gnidchenko, Andrey A.

Abstract

This paper examines structural transformation along the development path by linking export concentration to economic development in a cross-country setting. I explore the role of widening product mix, export restructuring and quality upgrading for the patterns of export concentration measured by the weighted Theil index. This study contributes to the literature by developing the decomposition of this index into the extensive, quantitative and qualitative components. I find that structural transformation is primarily driven by export restructuring according to the world demand and towards the products with higher potential to improve quality. Controlling for the world demand, re-specialization is not pronounced at a high level of economic development, while the ability to upgrade quality becomes increasingly important for the higher-middle-income and high-income countries.

Suggested Citation

  • Gnidchenko, Andrey A., 2021. "Structural transformation and quality ladders: Evidence from the new Theil's decomposition," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 281-291.
    • Handle: RePEc:eee:streco:v:59:y:2021:i:c:p:281-291
    DOI: 10.1016/j.strueco.2021.09.002
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    More about this item

    Keywords

    Export concentration; Economic development; Theil index; Unit value;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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