Export Volatility and Government Policy for Production Branch

This paper analyses the hypothesis that export volatility depends upon the level of industrialization of the exporting country and the level product cycle for exporting product. It also discusses the significance of the empirical findings, their importance in explaining why government policies have increased export instability in many developing countries, and their policy implications. The volatility of export growth for products is much higher for the developing than for the industrial countries. Finally, some research has found evidence that diversification encourages competition and the introduction of new technology. Results of the study could suggest that diversification may proceed along two basic patterns, and that, for developing countries, different effects on overall volatility could be associated with each pattern