Manuel R. Agosin

Determinants of Export Diversification Around the World: 1962–2000

Using a large dataset of countries during the last forty years, this paper analyzes the main determinants of export diversification. We explore the role of several factors and we use three different indicators of export diversification. We find robust evidence across specifications and indicators that trade openness induces higher specialization and does not favor export diversification. In contrast, financial development helps countries to diversify their exports. Looking at the effects of exchange rates, our results suggest a negative effect of real exchange rate overvaluation, but not significant effects of exchange rate volatility. We also find evidence that capital accumulation contributes positively to diversity exports and that increasing remoteness tend to reduce export diversification. We explore also the role of terms of trade shocks. Some of our results suggest that there is an interesting interaction between this variable and human capital. We find that improvements in terms of trade tend to concentrate exports, but this effect is lower for those countries with higher levels of human capital. This evidence suggests that countries with higher education can take advantage of positive terms of trade shocks to increase export diversification.

The emergence of new successful export activities in Latin America: the case of Chile.

This paper surveys overall export growth in Chile and focuses on three case studies of the emergence of successful export activities in Chile: wine, pork and blueberries. Each case study discusses how companies, associations, and governments at various levels have addressed market failures and facilitated the provision of public goods necessary for each activity. The case studies additionally profile first movers in each activity and describe the positive externalities they provide to imitators, particularly diffusion of export knowledge. Also included are counterfactual cases of a less successful firm or activity (an unsuccessful wine exporter, other types of berries, and commodity pork production rather than custom cuts, respectively) and a discussion of policy implications.

Openness and the International allocation of foreign direct investment

Abstract This paper develops an ordinal index to measure the openness of FDI policy regimes for individual countries. There has been a generalised increase in the index between 1990 and 2002. The most important determinants of variations in FDI flows across countries and over time are country size, the level of educational achievement, and growth. The openness index is positively associated with FDI flows, but its explanatory power is low. Liberalising approval procedures and lifting requirements that foreign companies enter into joint ventures with domestic firms encourage FDI. We conclude that the openness of the FDI regime operates as a factor enabling FDI, but that location advantages are paramount in determining the international allocation of FDI. We also turn the question around and ask what countries are more likely to impose restrictions on FDI. We find that lower levels of education and larger domestic markets are associated with greater restrictions on FDI. In addition, there is some evidence that better institutions are associated with lower FDI restrictions.

Trade and Growth: Why Asia Grows Faster than Latin America

This paper deals with a topic that has been amply debated in the development literature: the relationship between trade and growth. The papers hypothesis is that what matters for growth is not merely openness to trade, or, for that matter, export growth per se. The key feature of countries that have surged ahead in recent decades is that fast export growth has been accompanied by export diversification. The paper tests this hypothesis in the framework of an empirical growth model for the period 1980-2003. It finds considerable support for the hypothesis that diversified export growth is one of the keys to economic growth. The model has strong explanatory power and is able to show why rapidly growing Asian countries have done better than Latin American countries.

Economic Growth in Central America

Economic growth in Latin America and the rise of material welfare has lagged behind that of more dynamic areas of the world economy. In a region prone to policy experiments, the policies of the Washington Consensus applied since the 1990s failed to bring sustained growth to most of Latin America. Andres Solimano and an impressive set of contributors analyze the last 40 years in order to determine the role of economic reforms, external conditions, factor accumulation, income inequality, political instability and productivity in explaining GDP increases. The book also looks at cycles of growth, identifying periods of rapid growth and contrasting them with periods of stagnation and collapse.

Explaining the Increase in Saving in Chile

The paper attempts to explain the sharp increase in the Chilean domestic saving rate. It addresses the issue from different angles. It estimates the series for the period 1960-1994 for domestic saving and its main components (public and private saving and within the latter, household and business saving). With these data, a series of econometric analyses is done within the framework of an error correction model. The paper explores the extent to which households adjust their saving to take into account the saving behavior of business saving. It also undertakes a study of corporate saving using panel data for firms listed on the Chilean stock exchange for the period 1986-1994.