International Trade Working Paper

The International Trade Working Paper series promptly documents and disseminates reviews, analytical work and think-pieces to facilitate the exchange of ideas and to stimulate debates and discussions on issues that are of interest to developing countries in general and Commonwealth members in particular. The issues considered in the papers may be evolving in nature, leading to further work and refinement at a later stage.


Export Diversification, Upstreamness and Global Value Chains

Experience of Commonwealth Member Countries

This study examines the determinants of export diversification for a group of Commonwealth member countries. It introduces a measure of participation in global value chains (GVCs) along with the average ‘upstreamness’ of exports as potential explainers in addition to the usual variables used, such as income, human capital and physical capital. It finds that export diversification by commodity is lowest for least developed countries (LDCs), followed by small states and small island developing states (SIDS), but also that there is a definite impact of Commonwealth heritage on intra-Commonwealth trade. It concludes that mere participation in value chains is not enough: the exact positioning of countries in the value chain is critical and requires more policy attention. Furthermore, developing countries benefit from diversification whereas developed countries gain from specialisation.


Keywords: upstreamness, exports, LDCs, value chains, export diversification
JEL: F44: International Economics / Macroeconomic Aspects of International Trade and Finance / International Business Cycles; F63: International Economics / Economic Impacts of Globalization / Economic Impacts of Globalization: Economic Development; F10: International Economics / Trade / Trade: General
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