Publication: Managing Openness and Volatility : The Role of Export Diversification
Lim, Jamus Jerome
As developing countries look to embrace an outward-oriented growth strategy, some may be concerned about the possibility that increased openness will be accompanied by increased volatility. However, although a more open economy may face increased volatility in its terms of trade, openness confers diversification benefits. In this note, authors argue that export diversification is a key mitigating factor for the total effect of openness on volatility. More specifically, authors show that most developing countries fall on the "good" side of a diversification threshold, where they are likely to experience less volatility as they pursue a strategy of greater openness.
“Haddad, Mona; Lim, Jamus Jerome; Saborowski, Christian. 2010. Managing Openness and Volatility : The Role of Export Diversification. Economic Premise; No. 6. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/c45a052f-adce-5b59-891a-639dd11f1d33 License: CC BY 3.0 IGO.”