Embed Size (px)
Citation preview
Diversification and Structural Transformation in Developing
Economies
Chris Papageorgiou
Research Department IMF
UNWIDER September 13, 2018
• IMF is stepping up analysis of macrostructural issues
• Diversification and structural reforms are now at the
center of both policy research and operations
Diversification
Dimensions of Diversification
Diversification
Export Diversification
Across Products
Across Partners
Quality UpgradingCountry, Sector,
Product level
IMF Export Diversification Toolkit
• This toolkit contains two main databases:
❑Export Diversification Database
❑Export Quality Database
• Coverage of the databases
❑Cover 187 countries
❑Time coverage:1962-2015, annual data
• This is an output of Growth through Diversification Project (the IMF-DFID Collaboration)
02
46
Div
ers
ifica
tion Index
0 20000 40000 60000Real GDP Per Capita
Nonparametric Quadratic
Export Diversification: Cross-Country
Export Diversification and Quality Upgrading for Growth and Stability
Growth Volatility➢ Robust relationship between
diversification and growth in LICs.
➢ Quality upgrading and sectoral reallocation are linked to higher growth.
• Significant positive relationship between export diversification and reduction in output volatility.
0
0.2
0.4
0.6
0.8
1
1.2
1.4
Less Diversified More Diversified
Growth Rate, LICs, 1962-2010
3.6
3.8
4
4.2
4.4
4.6
4.8
5
Less Diversified More Diversified
Volatility, LICs, 1962-2010
Note: “Less Diversified” here means the countries with diversification level below 30 percentile of all LICs; “More Diversified” here means the
countries with diversification level above 70 percentile of all LICs.
Export Product Diversification Episodes
.1.2
.3.4
.5
He
rfin
dah
l in
de
x
1960 1970 1980 1990 2000 2010year
Div. episode (1969-2000) Herfindahl index
HP Break
Chile
.05
.1.1
5.2
.25
He
rfin
dah
l in
de
x
1960 1970 1980 1990 2000 2010year
Div. episode (1962-91) Div. episode (2004-08)
Herfindahl index HP
Break
Malaysia
0
.05
.1.1
5.2
He
rfin
dah
l in
de
x
1960 1970 1980 1990 2000 2010year
Div. episode (1962-89) Herfindahl index
HP Break
Thailand
.1.2
.3.4
.5.6
He
rfin
dah
l in
de
x
1960 1970 1980 1990 2000 2010year
Div. episode (1983-97) Herfindahl index
HP Break
Ghana
.05
.1.1
5.2
.25
He
rfin
dah
l in
de
x
1960 1970 1980 1990 2000 2010year
Div. episode (1977-95) Herfindahl index
HP Break
Madagascar
.2.4
.6.8
1
He
rfin
dah
l in
de
x1960 1970 1980 1990 2000 2010
year
Div. episode (1967-72) Div. episode (1978-86)
Herfindahl index HP
Break
Mauritania
.2.4
.6.8
11.2
90
th p
erc
entile
= 1
0 10000 20000 30000 40000Exporter GDP per capita (2000 constant Dollars)
HIC MIC
LIC Lowess Fit
Quality across all Exports
Export Quality and Development❑ Quality upgrading is a crucial component of development, particularly
when trying to move to upper middle-income status
❑ Some countries need diversification, others need quality upgrading.❑ Opportunities in manufacturing, but also agriculture
Quality Ladders Tanzania
➢ Given its concentration in agricultural products and crude materials,
Tanzania has potential for horizontal diversification but also for
quality upgrading in agriculture.
0.5
11.5
2
Qua
lity (
90th
perc
en
tile
=1
)
010
20
30
40
Pe
rce
nt o
f E
xp
ort
s
Animal&Veg Oils
Beverages and Tobacco
Chemicals
Crude Materials,etc
Food/Live Animals
Machinery and Transport Equip.
Manuf GoodsMinerals
Misc. Manuf ArticlesOthers
Percent of Total Exports Quality Ladder
Tanzania position
Tanzania: Quality by SITC1 Sector, 2010
➢ China has some additional potential for quality upgrading, but
may also aim to diversify further across products and upgrade
the tasks it performs.
0.5
11.5
2
Qua
lity (
90th
perc
en
tile
=1
)
010
20
30
40
50
Pe
rce
nt o
f E
xp
ort
s
Animal&Veg Oils
Beverages and Tobacco
Chemicals
Crude Materials,etc
Food/Live Animals
Machinery and Transport Equip.
Manuf GoodsMinerals
Misc. Manuf ArticlesOthers
Percent of Total Exports Quality Ladder
China position
China: Quality by SITC1 Sector, 2010
Quality Ladders What is next for China?
➢Within its two strongest SITC1 sectors, China’s exports seem
tilted towards less sophisticated products, e.g. transport
equipment is lagging behind other machinery.
.4.6
.81
1.2
Qu
ality
(90
th p
erc
en
tile
=1
)
05
10
15
20
25
Pe
rcent of to
tal exp
ort
s
Electrical machinery
Machinery other than electric
Transport equipment
Percent of Total Exports Quality Ladder
China position
Machinery and transport equipment
China: Quality by SITC2 Sector, 2010
Quality Ladders China: zooming into subsectors
➢ Likewise clothing still dominates within Miscellaneous
Manufactures.
.2.4
.6.8
11.2
Qu
ality
(90
th p
erc
en
tile
=1
)
02
46
810
Pe
rcent of to
tal exp
ort
s
Clothing
Footwear
Furniture
Miscellaneous manufactured articles
Sanitary, plumbing, fixt.
Scientif & control instrumente, etc.
Travel goods and similar articles
Percent of Total Exports Quality Ladder
China position
Miscellaneous manufactured articles
China: Quality by SITC2 Sector, 2010
Quality Ladders China: zooming into subsectors
Diversification Toolkithttp://www.imf.org/external/datamapper/datasets/SPRLU
Structural Reforms
IMF Database• Reform indicators for 90 countries covering LICs, EMs, and AEs from 1973-2014.
• Constructed from multiple sources: previous cross-country databases, countrylegislation, IMF staff reports, FSAPs, among others.
• Unique in terms of country-time coverage and breadth of sectoral areas:
• Financial: credit controls, interest rate controls, bank entry barriers, banking supervision, privatization, and security market development.
• Capital and current account: restrictions on exchange payments and receipts (imports, invisibles, capital).
• Trade: product-level tariffs.• Product markets: ownership, regulation and barriers to entry in telecommunications and
electricity markets.• Labor markets: employment protection legislation including procedural requirements,
firing costs and requirements, and redress measures.
4
5
Structural Reforms Database – Preliminary Results
Trade Regulation
Note: Higher values of the indicator denote higher liberalization
12
Capital Account Regulation
Note: Higher values of the indicator denote higher liberalization
9
Labor Regulation
Note: Higher values of the indicator denote higher liberalization
8
Country case: Malaysia
95
100
105
125
120
115
110
130
135
1970 1975 1980 1985 1990 1995 2010
Transition to upper-middle income(1996) GlobalFinancial Crisis (2008-09)
Trade Liberalization
1stGenerationReforms(early1980s-2000)
2nd GenerationReforms (2000-2010)
3rd GenerationReforms (2010onwards)
LaborMarkets
Turnedlower-middleincome (1969) AsianCrisis (1997-98)
...onwards→
Banking System
2000 2005
Capital MarketDev.
Business
Regulations
(TFP Index1970=100)
Country Examples, 1973-2014
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
18
16
14
12
10
8
6
4
2
0
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
20
18
16
14
12
10
8
6
4
2
0
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Morocco: Financial Reform Index
0.95
0.9
0.85
0.8
0.75
0.7
0.65
0.6
0.55
0.50
5
10
15
20
25
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Switzerland: Financial Reform Index
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
16
14
12
10
8
6
4
2
0
Ghana: Financial Reform Index Kazakhstan: Financial Reform Index
Interest rate controls
Banking Supervision
International capital flows
Aggregate CreditCeilings
Directed credit/reserve requirements
Entry barriers/pro-competitionmeasures
Privatization
Security Markets
Total Index 16
Conceptual framework on prioritization
Technology & Innovation
Industry Regulations
Business Regulations
Labor Market
Infrastructure
Banking System
Legal System & Property Rights
Capital Market Development
Trade Liberalization
Agriculture
LIDCs EMs AMs
Refo
rmT
yp
es
IncomeLevel
Highest priority reforms Other priority reforms
Note: Comparisons across reforms within each country group. Darker shades imply larger gains from reforms.
- 10,000 20,000 30,000 40,000 50,000 60,000
LIDC EM AM
2,449 45,138 PPP Per capita
Agriculture
Diversification
Process
Development
Process
Reform
Priorities
Structural
Transformation
ProcessManufacturing Services
Take-off stage
Steady state
RealFinanci
alLabor
Financial Real Labor
LaborFinanci
alReal
Thank You!
