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This study aims to examine whether diversified economies enhance the growth benefits from foreign direct investment (FDI). Diversified economies benefit from stable export earnings, stable investment composition and greater factor endowments through forward and backward linkages that can leverage superior foreign technology embedded in FDI. This is crucial as many African economies suffer from dependency while FDI is concentrated in the primary sector.

The authors use a dataset of 15 Economic Community of West African States from 1995 to 2020 and compile variables from various sources, including an export diversification index measured using the Herfindahl–Hirschman index of product concentration. The authors use a growth regression model estimated using dynamic panel estimators to control for endogeneity and simultaneity issues.

The results show that the effects of direct FDI are insignificant to growth considering diversification and controlling for other confounding factors. Meanwhile, diversification is associated with growth, which highlights the importance of industrial policy. More importantly, the authors find that the marginal effects of FDI are positively and significantly associated with growth when diversification levels are low, implying that production structure matters for the FDI–growth nexus in developing economies.

Previous studies have overlooked the role of export production structure on the FDI–growth nexus. Many developing economies are dependent on primary exports and suffer from dependency, which implies lower levels of factor endowments. As such, this reduces the growth gains from FDI. The authors provide new empirical evidence on the importance of export production structure on the FDI–growth nexus.

This study investigates the effect of multilateral trade liberalization on services export diversification with a view to complementing the recently published work on the effect of multilateral trade liberalization on export product diversification.

The empirical exercise been performed using a panel dataset of 133 countries over the period 1995–2014.

The findings show that multilateral trade liberalization is associated with greater services export diversification in both developed and developing countries alike. This is particularly the case in countries with a high reliance on manufactured goods exports or those that enjoy greater export product diversification. Interestingly, multilateral trade liberalization enhances services export diversification in countries that experience higher foreign direct investment inflows.

These findings highlight the importance of multilateral trade liberalization for services export diversification. The study has considered explicitly supply-side factors that could affect services export diversification. This is because the indicator of multilateral trade liberalization is highly correlated with some demand-side factors, such as the world demand for services exports. Therefore, another avenue for future research could involve looking at the demand side factors that could influence services export diversification, and whether the degree of multilateral trade liberalization matters for the influence of these demand factors on services export diversification.

The current study through its positive effect on both export product diversification and services export diversification, greater cooperation among World Trade Organization (WTO) Members on trade matters could help revive economic growth, particularly in the current COVID-19 pandemic that has significantly plummeted it.

To the best of our knowledge, this is first study that has investigated this issue.

The increasing growth in global trade is promoting economic diversification through efficient air cargo logistics. The overdependence of Nigeria on mono-product export, mainly crude oil, hinder the successful implementation of economic diversification policy. However, air cargo export plays a significant role in any successful economic diversification policy. Despite the importance of air export of cargo to the economy, literature is scarce on the role of air cargo export in economic diversification studies. This chapter assesses the performance of air cargo export by highlighting its inherent opportunity to support economic diversification in Nigeria. The analysis draws on air cargo export data by volume, types, and airline market share in Nigeria. Regression analysis established a significant relationship between Nigeria's gross domestic product (GDP) and air cargo export. Johansen cointegration test showed that both short and long-run cointegration exists between air cargo and GDP in Nigeria. An increasing trend in Nigeria's air cargo export volume indicates the significance of air cargo export to support economic diversification policy in Nigeria. Airlines market shares have British Airways, Virgin Atlantic, Emirates, and Saudi Air dominating the exportation of cargo in Nigeria. Agricultural products dominate the air cargo export with 34.6% volume, followed by manufacturing products (23.6%). An all-inclusive policy that promotes international trade for the economic emancipation of Nigeria through diversification into agriculture and manufacturing sectors is necessary.

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.

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.

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.

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.

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.

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

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.

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.

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.

The purpose of this study is to explore the effect of economic complexity on services export diversification. This study has been built on two arguments. The first one draws from Eichengreen and Gupta (2013b) and states that countries that export complex products would have a high penetration in the international goods market and establish a network that could be exploited to expand their range of services export items. Second, by inducing higher inflows of foreign direct investment (FDI), greater economic complexity could contribute to fostering services export diversification.

The empirical analysis uses a panel data set of 109 countries (both developed and developing countries) over the period of 1985–2014, and in particular, non-overlapping sub-periods of five-year average data. Building on the two-step system Generalized Method of Moments, the empirical analysis has provided support for the above-mentioned two theoretical hypotheses.

The findings indicate that greater economic complexity has been associated with a higher level of services export diversification, and the magnitude of this positive effect is higher for high-income countries than for developing countries. Furthermore, the share of FDI inflows (in percentage of gross domestic product) matters for the effect of economic complexity on services export diversification. Specially, economic complexity exerts a higher positive effect on services export diversification, as the share of net FDI inflows in gross domestic product increases.

From a policy perspective, the analysis complements previous works on the effects of economic complexity (e.g. on economic growth, income inequality, poverty, etc.), by showing that economic complexity also matters for fostering the diversification of countries' services export items. Enhancing economic complexity should be at the heart of policymakers' agenda, both at the national and international levels, given its strong positive effect on macroeconomic aggregates, including on services export diversification, the latter being also an important engine for economic growth (Anand et al., 2012; Gnangnon, 2021a; Mishra et al., 2011; Stojkoski et al., 2016).

This study opens an avenue for future research on whether services export diversification influences economic complexity. One avenue for future research could also be to explore the effect of comparative advantage on goods and services (using the Balassa's revealed comparative advantage index) on services export diversification. Future works could also examine how economic complexity affects different categories of services sectors, including traditional services and modern services.

To the best of the author’s knowledge, this study is the first to address this topic in the literature.

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.

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.

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.

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.

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.

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.

This paper aims to empirically analyze the impact of export diversification on gross domestic product (GDP) per capita growth.

Using system generalized method of moments (GMM), a nonlinear model in a dynamic panel data growth framework for 101 countries between 1995 and 2019 was estimated.

Results evidenced that export concentration, measured by the Herfindahl–Hirschman Index (HHI), is negatively associated with GDP per capita growth after controlling for the effects of other explanatory variables. Further, the squared term of HHI used in the model to measure the nonlinear relationship between export concentration and economic growth indicated that the low-income and lower-middle-income countries benefited from export diversification. At the same time, high-income and upper-middle-income countries perform well with their export specialization. The results of the robustness check validate the findings of nonlinear estimation.

The findings recommend that low-income and lower-middle-income countries diversify their export basket to improve economic growth by generating stable export earnings. Similarly, high-income and upper-middle-income countries should focus on measures to close the product lines which no longer belong to their factor endowments and rebalance their export basket.

This study contributes to the existing literature by using the system GMM method, which is most appropriate for a dynamic panel data growth framework with up-to-date data. Further, this study segregates a large panel into 43 concentrated and 58 diversified countries to test the robustness of the empirical results.

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.

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.

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.

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.

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

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

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.

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.

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.

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.

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.

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