Export diversification and structural dynamics in the growth process: The case of Chile

Abstract

It is frequently suggested that export diversification, or the progression from 'traditional' to 'non-traditional' exports, is an important component of export-led growth. This paper constructs several measures of diversification and structural change in exports in the context of the Chilean experience of the last 30 years. We find that since the mid-1970s, Chilean growth has been accompanied by export diversification, while little diversification had taken place previously. Structural change has accelerated during periods of internal crisis and external shock. Thus, while diversification may happen in the long run, in Chile it only happened during times of severe structural change and this suggests that a policy of deliberate diversification may not be as desirable as the diversification process that is a result of a change in currency valuation and trade liberalization. © 1997 Elsevier Science B.V.