How costly is rent-seeking to diversification: an empirical approach

Konferenzbeitrag

The empirical U-shaped pattern between product diversification and economic development has been widely examined, but here we analyze the determinants of diversification. We find that a high level of rent-seeking activities has a large impact on the diversification of nations: in countries where rent-seeking is a widespread practice, the number of products being exported will be smaller and its value more concentrated in certain goods. Our analysis embraces a large sample of more than 130 countries between 1995 and 2007, using a highly disaggregated export database comprising 5000 products adopting both diversification indices or the number of new products as measures of diversification. To establish this relationship we use a Generalized Method of Moments estimation, controlling for endogeneity originated from reverse causality, and we also use a negative binomial regression to estimate the impact of rent-seeking on new export products. These empirical predictions contribute to the idea that resources allocated to harm diversification are an important binding constraint for developing countries.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Proceedings of the German Development Economics Conference, Hannover 2010 ; No. 4

Classification and Topics

• Classification: Wirtschaft ; Macroeconomic Analyses of Economic Development ; Innovation and Invention: Processes and Incentives
• Subject: Product diversification ; international trade ; economic development

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Starosta de Waldemar, Felipe
• Event: Veröffentlichung
• (who): Verein für Socialpolitik, Ausschuss für Entwicklungsländer
• (where): Göttingen
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/39991
• Last update: 10.03.2025, 11:44 AM CET