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Article
Publication date: 12 June 2018

Kashif Munir and Zanib Javed

The purpose of this paper is to analyze the impact of export composition (diversification or specialization) on economic growth of South Asian countries, while export

Abstract

Purpose

The purpose of this paper is to analyze the impact of export composition (diversification or specialization) on economic growth of South Asian countries, while export diversification is further categorized into horizontal and vertical export diversification.

Design/methodology/approach

The study uses Cobb-Douglas production function, in which export is augmented in the production function. To analyze the non-linear relationship (inverted U- or U-shape) with economic growth, square term of exports Herfindahl index, horizontal, and vertical export diversification are introduced in the model. Panel data of four countries of South Asia, i.e. Bangladesh, India, Pakistan and Sri Lanka is utilized from 1990 to 2013 at annual frequency under fixed effect model.

Findings

Exports Herfindahl index represented inverted U-shape relationship with economic growth. An increase in export diversification lead to higher economic growth initially, however, after the threshold level, export specialization have positive impact on economic growth. Horizontal export diversification is not beneficial for economic growth initially, however, after the threshold level, introducing new sector increases economic growth in South Asian countries. Vertical export diversification has insignificant and U-shaped relationship with economic growth.

Practical implications

Education and skill formation are essential components for creativity and innovation, therefore attention must be paid toward labor training and education. Government must encourage the exporters to increase diversification in their export portfolio as well as provide incentives and technical assistance for research and development in the manufacturing sector.

Originality/value

This study contributes by analyzing the non-linear relationship between export composition, i.e. diversification (horizontal and vertical) or specialization and economic growth in South Asian countries. The study is useful to boost the potential level of exports on sustainable economic growth of South Asian countries. This study provides the essential evidence, information and better understanding to key stakeholders of exports.

Details

South Asian Journal of Business Studies, vol. 7 no. 2
Type: Research Article
ISSN: 2398-628X

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Article
Publication date: 12 February 2018

Subhadra Ganguli

The purpose of this paper is to analyze merchandise trade patterns among the GCC states with the backdrop of economic diversification within these economies.

Abstract

Purpose

The purpose of this paper is to analyze merchandise trade patterns among the GCC states with the backdrop of economic diversification within these economies.

Design/methodology/approach

This empirical research quantitatively analyses patterns of merchandise trade among the GCC states during 1995-2015 with specific focus on concentration, diversification and similarity of (export and import) trade indices as well as diversification within GCC economies.

Findings

The paper concludes that while Bahrain merchandise export structure shows dissimilarity when compared with other GCC states during 1995 and 2015, its imports appear to be very similar with those of the rest. The other five GCC states show more similarity among themselves in both merchandise exports and imports than that of Bahrain. Only UAE has shown an increase in both concentration and diversification indices though the increased numbers are still lower than those of the other GCC states and low in absolute terms.

Originality/value

The GCC has embarked on economic diversification; however, there is relatively less trade within the GCC as compared with other regional trading blocks. The paper considers trade within the GCC to explore the degree of similarity, diversification and concentration of traded products of each country. Further study should analyze the impact of diversification on intra-GCC trade. The results of this paper will be of value to GCC policymakers for providing a clear rationale for boosting trade and diversification with the long-term goal of a single currency economic union.

Details

World Journal of Entrepreneurship, Management and Sustainable Development, vol. 14 no. 1
Type: Research Article
ISSN: 2042-5961

Keywords

Content available
Article
Publication date: 11 June 2021

Sohail Amjed and Iqtidar Ali Shah

The purpose of this study is to investigate long-run and short-run relationships between trade diversification, financial system development, capital formation and economic growth.

Abstract

Purpose

The purpose of this study is to investigate long-run and short-run relationships between trade diversification, financial system development, capital formation and economic growth.

Design/methodology/approach

ARDL estimation approach is applied to analyze long-run and short-run relationships between the financial system development, capital formation, economic growth and trade diversification in case of the Sultanate of Oman over the period 39 years starting from 1979 till 2017.

Findings

The results show that financial system development and economic growth has a positive impact on trade diversification in the short-run and long-run. However, capital formation has a negative impact on trade diversification in the short run and long run. The negative relationship between trade diversification and capital formation implies that over the period of study, the investment in capital goods was made to enhance the production capacity of the oil sector to maximize revenue.

Research limitations/implications

This research is limited to analyze long-run and short-run relationship between the financial system development, capital formation and economic growth and trade diversification in case of Sultanate of Oman.

Practical implications

To achieve the diversification goal, the policymakers need to formulate policies to strengthen the financial system and invest in infrastructure development to promote the non-oil sector. The research findings of this study will provide insights to the policymakers to formulate an effective diversification policy.

Originality/value

This research contributes to the existing literature by providing empirical evidence of the short-run and long-run analysis of the selected variables in the context of an oil-dependent country.

Details

Journal of Economics and Development, vol. 23 no. 3
Type: Research Article
ISSN: 1859-0020

Keywords

Content available
Article
Publication date: 29 April 2021

Sena Kimm Gnangnon

The international trade literature has established that export product diversification lowers export product revenue instability. The current analysis investigates whether…

Abstract

Purpose

The international trade literature has established that export product diversification lowers export product revenue instability. The current analysis investigates whether this finding carries over services exports.

Design/methodology/approach

The empirical analysis covers a sample of 152 countries over the period 1980–2014 and employs the two-step system generalized method of moments (GMM) approach.

Findings

The empirical findings indicate that services export diversification reduces services export revenue instability both over the full sample as well as over sub-samples of high-income countries (HICs), least developed countries (LDCs) as well as developing countries (i.e. non-HICs) that are not LDCs. HICs appear to experience a higher positive effect of services export diversification on services export revenue instability than in developing countries. The analysis also shows that countries that further open-up to international trade enjoy a greater reducing effect of services export diversification on the instability of services export revenue.

Research limitations/implications

This analysis, therefore, adds to the existing studies on the relationship between export product diversification and the instability of revenue derived from goods exports by focusing on the services export side. An important message from the analysis is that countries that diversify their services export basket enjoy lower services export revenue instability when they further integrate into the world trade market.

Practical implications

This study highlights the importance of services export diversification, including for stabilizing services export revenue to services traders. Diversifying services export items, including across traditional and modern services sectors involves the implementation of a wide range of policies and measures, of which the liberalization of the services sectors through reduction and eventually the elimination of services trade barriers; the improvement of the business environment and the development of domestic financial markets (see for example, Hoekman, 2017). It could be interesting that another study consider policies and measures that could promote services export diversification.

Originality/value

To the best of the authors’ knowledge, this is the first time this topic is being addressed, including empirically.

Details

International Trade, Politics and Development, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2586-3932

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Article
Publication date: 25 February 2020

Sena Kimm Gnangnon

This study investigates empirically the impact of export product concentration (or diversification) on social protection expenditure in both developed and developing…

Abstract

Purpose

This study investigates empirically the impact of export product concentration (or diversification) on social protection expenditure in both developed and developing countries. The analysis further explores whether this effect depends on countries' degree of openness to international trade.

Design/methodology/approach

The analysis has relied on an unbalanced panel data set comprising 112 countries over the period 1980–2010 and used the two-step system generalized methods of moments (GMM) estimator as the econometric approach.

Findings

The empirical analysis conveys two messages. First, low-income countries experience a positive effect of export product concentration on social protection expenditure, while for relatively advanced economies, export product diversification positively influences social protection expenditure. Second, countries that further open up their economies to international trade experience a positive effect of export product diversification on social protection expenditure, with the magnitude of this impact increasing as the degree of openness rises.

Research limitations/implications

These findings highlight the relevance of export product diversification for social protection expenditure in both developed and developing countries, notably in the context of greater trade openness.

Practical implications

The diversification of export products is one means for developed and developing countries alike to increase the scope for social protection expenditure.

Originality/value

To the best of the authors' knowledge, this topic had not been addressed.

Details

Journal of Economic Studies, vol. 47 no. 3
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 1 April 1990

Chong S. Lee and Yoo S. Yang

This empirical study investigates the relationship between thechoice of an export market expansion strategy and the subsequentperformance of exporting firms. Multiple…

Abstract

This empirical study investigates the relationship between the choice of an export market expansion strategy and the subsequent performance of exporting firms. Multiple measures of export performance were compared across three groups of firms following different export market expansion strategies: export market concentration, concentric diversification, and diversification strategies. A sample of 52 small and medium‐sized US high technology manufacturers showed significant differences among three strategic groups in export level and growth measures, but no significant differences in export profitability measures were found.

Details

International Marketing Review, vol. 7 no. 4
Type: Research Article
ISSN: 0265-1335

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Book part
Publication date: 30 September 2020

Léo Charles

Using an original product level database, this article analyzes the nature and dynamics of Swiss specializations during the “first globalization” (1850–1913). I study the…

Abstract

Using an original product level database, this article analyzes the nature and dynamics of Swiss specializations during the “first globalization” (1850–1913). I study the comparative advantages, as well as the evolution of the trade structure, in order to understand economic performance differences between Switzerland and France. Despite differences in terms of market size, some common trends are identified. I also argue that Switzerland's skilled labor force, along with an intelligent choice of economic policy, allowed this country to adapt its specialization structure to global demand and enjoy rapid economic growth.

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Article
Publication date: 21 April 2020

Bhushan Praveen Jangam and Vaseem Akram

The purpose of this paper is to examine the nexus between financial integration and export diversification.

Abstract

Purpose

The purpose of this paper is to examine the nexus between financial integration and export diversification.

Design/methodology/approach

The authors consider 96 economies spanning over the period 1995-2014. To provide broader insights, the authors categorize 96 economies into developed, developing, high and low diversified panels. Both volume and equity-based measures of financial integration are used. The generalized method of moments (GMM) method is used to analyze the link between financial integration and export diversification.

Findings

The results derived from GMM indicate that financial integration is a vital factor of export diversification. Further, the findings reveal similar conclusions for developed, developing, high and low diversified panels.

Research limitations/implications

The outcome of this study suggests that promoting the financial integration of markets by lowering the restrictions on capital inflows helps countries to lower the risk and diversify their exports.

Originality/value

Though there exists enormous literature on export diversification, the nexus between financial integration and export diversification is limited. The present study bridges this research gap.

Content available
Article
Publication date: 8 July 2021

Sudeshna Ghosh

The author attempts to investigate through empirical exercise how the chances of female employment opportunities rise in a developing country like India, against the…

Abstract

Purpose

The author attempts to investigate through empirical exercise how the chances of female employment opportunities rise in a developing country like India, against the backdrop of changes in institutions that are associated with globalization. Following Dreher et al. (2012), the author measures how institutional arrangements proxied by political, cultural and social globalization impact women's labour force participation.

Design/methodology/approach

The relation between female labour force participation, economic growth and further export diversification are quite complex. The paper develops a simultaneous equation model through a growth equation, gender equation and globalization equation to identify the factors impacting female labour market opportunities in India, based on annual time series data 1991–2019.

Findings

The major results of this study are summarized as: (1) it is social globalization that positively impacts gender equality in employment opportunities apart from economic growth and trade diversification. (2) Evidence of “feminization of labour force” in the context of trade diversification is found and (3) equal gender opportunities reflect in equalizing outcomes in the labour market.

Originality/value

The present study contributes to the literature on gender inequality and economic growth in three major ways. First, it focuses upon a set of factors that explain gender inequality in opportunities that may impede economic growth. The study tries to explore how the persistence of gender inequality in the labour market influences negatively economic growth. Further how economic growth and trade diversification create pathways to impact gender inequality in the labour market. Second, the study tries to show how the male–female gap in employment opportunities constrains trade diversification. Third, trade diversification can induce modifications in the structure of production across sectors which can have a positive or negative impact on gender inequality. The actual impact is a matter of empirical exploration which this study has attempted. The author has shown in this study that gender inequality in a developing country like India reduces trade diversification directly through gender gaps in opportunity and indirectly by impeding economic growth which adversely impacts trade diversification.

Details

Journal of Economics and Development, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1859-0020

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Article
Publication date: 28 December 2020

Yu Lin, Shuaishuai Zhang and Yingjie Shi

The purpose of this paper is to examine the impact of operational stickiness on product quality. Particularly, it analyzes the moderating effect of product diversification

Abstract

Purpose

The purpose of this paper is to examine the impact of operational stickiness on product quality. Particularly, it analyzes the moderating effect of product diversification on the relationship between operational stickiness and product quality of exporting firms from China.

Design/methodology/approach

Using a sample of 3,567 exporting firms between 2002 and 2012 in China, this paper develops a fixed effect model to demonstrate the nonlinear relationship between operational stickiness and product quality.

Findings

Results show that operational stickiness has an inverted U-shaped impact on product quality, while inventory stickiness, property, plant and equipment (PPE) stickiness and labor stickiness are used to measure operational stickiness. Furthermore, the impact of operational stickiness on product quality is found to be moderated by product diversification.

Practical implications

Managers can achieve an optimal level of product quality by adjusting the level of operational stickiness. Firms with excessive operational stickiness should appropriately reduce the degree of stickiness to improve product quality. Besides, managers who focus on product quality should be cautious in adopting the product diversification strategy and be wary of the loss of product quality this strategy may cause.

Originality/value

This paper is the first study that has empirically validated the inverted U-shaped relationship between operational stickiness and product quality, and confirmed the moderating effect of product diversification on the relationship between operational stickiness and product quality. It provides a new idea to improve product quality by operational management.

Details

Journal of Manufacturing Technology Management, vol. 32 no. 2
Type: Research Article
ISSN: 1741-038X

Keywords

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