Export diversification

Diversification shows the degree to which an industry achieves expansive and far-reaching export competitiveness. Industries with a relatively high degree of diversification evidently possess the necessary capabilities to produce a variety of products that are demanded in a variety of markets. In this sense, the industry shows the ability to accommodate different customer needs, values, and cultures. Diversification deals with both product diversification and market diversification. An industry’s level of diversification from both perspectives reveals the degree to which an industry’s competitiveness is comprehensive. Product diversification is the level of product variety in the export basket of the industry, while market diversification deals with the number of foreign markets to which the industry exports. In other words, it reveals whether the industry possesses the necessary capabilities to produce a variety of products that are demanded in a variety of markets.

The best performing industries in terms of export diversity are those that produce and sell a great number of competitive products on a wide range of foreign markets. The leading industries identified by the diversification analysis are Manufacture of Prepared Meals and Animal Feed, Manufacture of Agrochemical Products, Manufacture of Furniture, etc. the least diversified industries are Manufacture and distribution of gas, steam and air conditioning, Mining of coal and lignite, Manufacture of bakery and farinaceous products and Mining of metal ores. They did not exhibit capacity to diversify they export both in terms of product and foreign market destinations. Industries are scattered by the number of the markets where they exhibited competitive advantage (on the vertical y-axis), and by the share of competitive’ products exports in the total value of the industry’s exports (horizontal x-axis). The vertical and horizontal lines intersecting the figure indicate the averages corresponding to each indicator. In this way, industries are classified into four quadrants by the number of markets where their market share was improved, and by the level of the product’s participation in such improvement.

Graph – Export diversification of industries (2009-2013)

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