DETERMINANTS OF EXPORT PRODUCT DIVERSIFICATION: EVIDENCE FROM DEVELOPING COUNTRIES

This study aims to identify the determinants of export product diversification in 85 developing countries over the period 2000-2022. In order to conduct a more comprehensive assessment, these countries were classified according to their geographical regions: Africa, the Americas, Asia, and Oceania. Three separate data sets were created and empirically analyzed. The analysis includes several independent variables that are thought to have a significant effect on export product diversification. These variables are: productive capacity index, economic growth, foreign direct investments, capital, labor force, inflation, public expenditures, and trade openness. The analysis of all countries indicates that increases in the productive capacity index, capital, labor, and public expenditures have a positive effect on export product diversification. In contrast, economic growth and trade openness have a negative effect on export product diversification. In African countries, an increase in the productive capacity index and foreign direct investment is associated with an increase in export diversification. However, public expenditures have the opposite effect, leading to a decrease in export diversification. In American countries, increases in the labor force and trade openness have a positive effect on export product diversification. Finally, in Asia and Oceania, it has been found that increases in the productive capacity index, capital, labor force, and public expenditures have led to an increase in export product diversification.