Non-linearity between export diversification and economic growth

The paper investigates on the non-linearity between export concentration and economic growth using dynamic panel estimation on a dataset from 1995 to 2010. The existing theory suggests how countries which diversify their export basket can boost their economic growth, thanks to both a portfolio and a dynamic effect, till a certain point on time where concentration again positively affects growth. The statistical significance of the squared term of concentration for all the different estimations carried out represents a first improvement with respect to the brief existing literature, which sometimes either did not obtain consistent results for the non-linearity or only checked for the negative effect of the linear term. Secondly, an almost total innovation brought by the research is the study of the effect that both Quality of exports and Openness to trade have on the position of the turning-point. The results suggest that those countries which look for quality upgrade or are heavily present in the international market scenario will firstly better reap the benefits coming from the first phase of diversification boosting all the process and, furthermore, obtaining higher final value of growth during the second phase characterized again by concentration.