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The team also comprised Irena Asmundson, Era Dabla-Norris, Christian Henn, Sarwat Jahan, and Ke Wang (SPR); Nick Gigineishvili and Samuele Rosa (AFR); Rahul Anand, Thelma Choi, Nombulelo Duma, Alex Pitt, and Jules Tapsoba (APD); and Rabah Arezki and Camelia Minoiu (ICD). Lisa Kolovich and José Romero provided outstanding research assistance. This note is part of a research project on macroeconomic policy in low-income countries supported by the U.K.’s Department for International Development (DFID).
Throughout, we use the World Bank classification for LICs.
The dataset combines importer- and exporter-reported data from COMTRADE to maximize comprehensiveness, while ensuring internal consistency, using the methodology of Asmundson (forthcoming).
The analysis considers two main indices: the Herfindahl index and the Theil index. The Theil index has the advantage of being decomposable into diversification along the extensive and intensive margins. For both indices, lower values indicate higher diversification.
In particular, reported employment changes considerably over time as different types of surveys are merged.
Schott (2004) shows that within-product quality differences can be dramatic. For instance, unit values for cotton shirts imported by the United States from Japan are 30 times higher than those from the Philippines.
Note that changes in the prices of individual commodities will not affect a country’s measured export quality.