Managing Openness and Volatility : The Role of Export Diversification
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 v...
| Main Authors: | , , |
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| Format: | Brief |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2010/03/11999611/managing-openness-volatility-role-export-diversification http://hdl.handle.net/10986/10203 |
| Summary: | 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. |
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