EXPORT DIVERSIFICATION AND SUSTAINABLE GROWTH

Sustainable economic growth is an essential goal for policy makers around the world, especially in developing countries. To achieve long-term growth and prosperity, export diversification and quality upgrading have been lately discussed as potential drivers of economic growth. This dissertation makes an effort to fill in some of the gaps in the literature through theoretical and empirical work to link economic diversification and long-term growth. My dissertation discusses various aspects of economic diversification including export diversification through export products and partners, export diversification on agriculture and manufacturing sectors, extensive and intensive margin of export diversification, real sector diversification, and quality upgrading of export products. My chapters cover the following main topics: the effects of export diversification and quality upgrading on economic growth; export diversification and growth volatility; and the real exchange rate, export diversification, and quality upgrading. I find supporting evidence of how economic diversification helps to promote long-term growth and reduce growth volatility. I also find real exchange rate misalignment has significant effects on export diversification. These questions are important for policy makers to understand whether diversification and quality upgrading could be used as a policy tool to promote sustainable growth and how countries could improve in economic diversification.