Export Diversification Curve in Light of the Ricardian Model
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Publish date: 2017-04-30
Gospodarka Narodowa 2017;288(2):5–27
In this paper we identify the determinants of export diversification from the perspective of the Ricardian model with many goods. According to this approach, the export diversification of a country can be regarded as an outcome of two effects: a relative productivity change due to technological progress and a relative country size change due to labor force growth compared with the rest of the world. For example, in a country characterized by improved productivity and an increased share of the world stock of labor, diversification should grow, while in the case of a decreased share and improved productivity abroad, it should fall. From the theoretical perspective it is also possible that these two effects neutralize each other and diversification may remain unchanged.