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East Asian Economic Review Vol. 15, No. 1, 2011. pp. 33-53.

DOI https://dx.doi.org/10.11644/KIEP.JEAI.2011.15.1.225

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Correlations-Adjusted Export Market Diversification

Author

Jung Joo La

Center for International Commerce and Finance

lyy98ljj75@gmail.com
Creative Commons Attribution License

EAER is an open access journal distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license.

Abstract

This paper introduces new export market diversification indices incorporated with correlations of business cycles among export partners to identify the actual effects of export market diversification on export instability. Three existing export market diversification indices reflect the dispersion level in terms of the number of export partners and their export shares, without a clear control for correlations among export earnings from export partners. In addition, they are underestimated or overestimated in illuminating the negative relationship with export instability. Correlations-Adjusted export market diversification indices help their normalization. Their superiority is also proven through the regression analysis in investigating the effects of export market diversification on export instability.

JEL classification: F13, E32, C82

Keywords

Correlations-Adjusted Export Market Diversification, Export Instability

Language

English

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