Agricultural export promotion through diversification of export basket: Evidence from panel data regression
DOI:
https://doi.org/10.14719/gst.e9Keywords:
agricultural exports, diversification, international trade, optimizationAbstract
The study aimed to determine the level of export diversification and its effect on agricultural exports across 57 countries over 11 years between 1996 and 2022. The study used data from World Bank and FAOSTAT. The study used panel data regression, pearson correlation and tabulation of data to derive inferences. The study used Herfindahl-Hirschman Index as measure of concentration of export basket. The findings highlighted the presence of both beta convergence among the nations i.e. countries having less diversification were catching-up with the countries having more diversification in agricultural exports. Most industrialised countries like the USA, the China, the Spain, and the Germany had very low values of concentration index i.e. their export basket had been more diversified over the years. In many less developed and developing countries like the Madagascar, the Cameroon, the Mauritius, the export basket was relatively more concentrated. The panel data regression results suggested that the effect of export concentration to agricultural export were significant with inverse-U shaped relationship. The optimum level of diversification where agricultural exports were maximum was at export concentration index value of 0.53, which suggested that neither extreme concentration nor extreme diversification was desirable. The inverse-U relationship was also observed with per-capita income which suggested that too low or high per capita income can reduce the exportable surplus. Based on the findings, it was suggested to have a balance between diversification and concentration while formulating export policies.
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