American Economic Review: Vol. 93 No. 1 (March 2003)
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Stages of Diversification
Imbs, Jean, and Romain Wacziarg. 2003. "Stages of Diversification ." American Economic Review, 93(1): 63-86.
This paper studies the evolution of sectoral concentration in relation to the level of per capita income. We show that various measures of sectoral concentration follow a U-shaped pattern across a wide variety of data sources: countries first diversify, in the sense that economic activity is spread more equally across sectors, but there exists, relatively late in the development process, a point at which they start specializing again. We discuss this finding in light of existing theories of trade and growth, which generally predict a monotonic relationship between income and diversification.
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