The Effect of Export Diversification on the Economic Growth of West-Asian Arab Countries
Keywords:export diversification, GDP, economic growth, west Asia
This paper examined the relationship between the patterns of export diversification and economic growth in west Asian Arab countries during the period (2000-2017) using World Bank, UNCTAD, and Pen World data. The study used the DX Diversification Index (UNCTAD). This index measures the country's export divergence from the world's diversification patterns. The OLS and FMOLS methods were used to estimate the study model coefficients. The study found that the exports diversification structures in this group diverged clearly from the world diversification pattern since the exports of group countries driven by a high degree of primary exports concentration. Moreover, the economic growth was influenced positively by human capital, primary products export growth, and the adoption of efficient anti-corruption policies, but, it negatively influenced by trade openness and population growth. The study disclosed a long-term relationship between economic growth and the interactions of explanatory variables in the model, while in the short run the relationship was weak and insignificant. Moreover, there was a reciprocal causality relationship between economic growth and the degree of exports diversification using (DX-index). The study recommends that Arab countries should reduce the reliance on the exports of primary products, enhancing the share of industrial-based exports to achieve sustainable growth and to reduce the impacts of primary export’s prices instability on their economies.
Abu Shihab. R, Soufan TH., Abdul-Khaliq SH. (2014) “The Causal Relationship between Exports and Economic Growth in Jordan”, Global Journal of Management and Business Research: Economics and Commerce, 14(3) Version 1.
Agosin. M. (2009) “Export diversification and growth in emerging economies”, EPAL review 97, April.
Alekhina V., Yoshino N. (2018) “the impact of world oil prices on an energy exporting economy including monetary policy”, ADBI Working Paper Series, No. 828.
Alkhatib S. (2006) “Evidence on the Export-Led Growth Hypothesis: The Jordanian Case”, Dirasat, Administrative Sciences, 33(2).
Aljomaily H. (2015) “Arab Economic Integration: Some Concerns about Failure and Future Prospects”, Almuntada journal, 29(261), 140-160.
Baffes. J, Kose. A., Ohnsorge F., Stocker M. (2015) “The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses”, World Bank Group, march.
Baker. D, Delong J., Krugman. P. (2005) “Asset returns and economic growth”, Brookings Papers on Economic Activity, 1, 289-330.
Behar, Alberto (2011) “The Trade Performance of the Middle East and North Africa”, Middle East and North Africa Working Paper Series No. 53.
Bhattacharya R., Wolde H. (2010) “Constraints on Trade in the MENA Region”, IMF Working Paper.
Besedes T., Prusa T. (2008) “The Role of Extensive and Intensive Margins and Export Growth”, working paper, February.
Cabral. M, Veiga P. (2010) “Determinants of Export Diversification and Sophistication in Sub-Saharan Africa”, the paper is part of the NBER project on African development.
Cadot, O. Carrère, C. and Strauss-Kahn, V (2011) “Export diversification: What's behind the hump?”, Review of Economics and Statistics, 93(2), 590-605.
Cadot, O. Carrere, C. & Strauss-Kahn, V (2013) “Trade diversification, income, and growth: what do we know?”, Journal of Economic Surveys, 27(4), 790-812.
Caldara D., Cavallo M., Iacoviello, M (2016) “Oil Price Elasticities and Oil Price Fluctuations”, Board of Governors of the Federal Reserve System, International Finance Discussion Papers, Number 1173.
Chenery, H.B. (1979) “Structural Change and Development Policy”, London: Oxford University Press.
Dinopoulos.E, Segerstrom, P. (2004) “Theory of North-South Trade and Globalization”, working paper .
Dennis. A, Shepherd.B (2011) “Trade Facilitation and Export Diversification”, The World Economy 34(1), 101-122.
Dogruel A., Tekce M. (2011) “Trade Liberalization and Export Diversification in Selected MENA Countries”, Topics in Middle Eastern and African Economies. Vol.13, September.
Ekmen S., Erlat G. (2014) “Export Diversification and Competitiveness: intensive and extensive margins of turkey”, Economic Approach, 24(88), 35-64.
Finger, J. M., Kreinin (1979) “A measure of ‘export similarity’ and its possible uses” in the Economic Journal, 89: 905-12.
Herzer D., Lehmann F. (2006) “What Does Export Diversification Do For Growth? An Econometric Analysis”, Applied Economics, Taylor Francis (Routledge), 2006, 38 (15), pp.1825-1838.
Imbs, J. and Wacziarg, R (2003) “Stages of diversification”, American Economic Review, 63-86.
Ito.T (1992) “U.S. Political Pressure and Economic Liberalization in East Asia”, The University of Chicago Press MISBN: 0-226-25999-4, URL: http://www.nber.org/books/fran93-1.
Klinger B., Lederman D. (2006) “Diversification, Innovation, and Imitation inside the Global Technological Frontier”, Policy Research Working Paper; No. 3872. World Bank, Washington, DC.
Kurihara Y., Fukushima A. (2016) “Openness of the Economy, Diversification, Specialization, and Economic Growth”, Journal of Economics and Development Studies 4(1), 31-38.
Love, James (1992) “Export instability and the domestic economy: Questions of Causality, The Journal of Development Studies, 28(4), 735-742.
Mankiw G., Campbell Y. (1990) “Permanent Income, Current Income. and Consumption”, Journal of Business & Economic Statistics, Vol. 8, No. 3.
Markowitz H. (1952) “Portfolio Selection”, The Journal of Finance, 7(1),77-91.
Macbeen, A. I. and Maizels A. (1968) “Export instability and Economic Development”, The American Economic Review, 58(3), 575-580.
Mdanat M, Warrad. T, Salhieh. L, Arabiyat. T (2018) “A Gravity Approach to Determinants of Export in a Small Open Economy: Evidence from Jordan”, International Journal of Economics and Financial Issues, (8) 2.
Minondo, Asier (2011) “Does comparative advantage explain countries’ diversification level? Review of World Economics”, 147(3), 507-526.
Odhiambo N, Twinoburyo.E (2018) “Monetary Policy and Economic Growth: A Review of International Literature”, Journal of Central Banking Theory and Practice, 2018(2):123-137.
Pacheco A, Piérola M. (2007) “Patterns of export diversification in developing countries: intensive and extensive margins”, HEI Working Paper No: 20.
Parteka A. and Tamberi, M. (2013a) “What determines export diversification in the development process? Empirical Assessment”, The World Economy, 36(6), 807–826.
Phillips P, Hansen.B (1990) “Statistical Inference in Instrumental Variables Regressions with I(1) Processes”, Review of Economic Studies, 57, 99-125.
Prebisch, R. (1950) “The economic development of Latin America and its principal problems”, UNECLA, New York. Also published in Economic Bulletin for Latin America, 7, 1–22.
Rostow, W. (1959) “The Stages of Economic Growth”, The Economic History Review, New Series, 12(1) 1-16.
Saidai. W. (2002) “Export development and diversification in Algeria: reality and challenge”, Albaheth Journal, (1),7-16.
Sha'ban J, Habib. M (2016) “The Role of Economic Reforms in the Structural Structure of Syrian Foreign Trade 2000-2010”, Al-Baath University Journal, 38 (16), 11-43.
Spetan Kh, Saqfalhait. N (2013) “Exports Diversification and Economic Growth: Case of Jordan and Other Selected ARAB Countries”, International Research Journal of Finance and Economics ISSN 1450-2887 Issue 105.
Vernon R. (1966) “International Investment and International Trade in the Product Cycle”, Quarterly Journal of Economics, 80 (May), 190-207.
Wilson P. (1977) “export instability and economic development”, Warwick economic papers. No (111) P2.
Yokoyama K. and Alemu M. A. (2009) “The Impacts of Vertical and Horizontal Export Diversification on Growth: An Empirical Study on Factors Explaining the Gap between Sub-Sahara Africa and East Asia's Performances”, Ritsumeikan International Affair, 17(41). 2009.