Structural Transformation in International Trade (2001-2015): Towards a New Classification

We examine the transformation of export (import) commodity structure for 77 countries from 2001 to 2015 and consider the links between changes in the extent of export (import) diversification and the share of intra-industry trade, accounting for countries' size (PPP GDP) and per capita income (per capita PPP GDP). We apply Theil index to assess the extent of international trade diversification, while the share of intra-industry trade is calculated using Grubel-Lloyd index. The importance of the between- and the within-industry components of Theil index for the case of export and import concentration is compared for the first time in the literature. We find that the within-industry component makes the largest contribution to the change in the extent of export and, especially, import diversification, while the between component is important only for a limited number of countries (oil exporters, some developed countries). Our results show that rapid changes in the share of intra-industry trade over the period were experienced only in countries with the high contribution of the within component in the Theil index. We also demonstrate that countries' size or per capita income only partially impact the nature of structural transformation: on the one hand, export and import bundle for developing countries tends to diversify, while it is more likely to concentrate for developed countries; on the other hand, the share of the within component in the Theil index is virtually not affected by size and per capita income.