5 per cent decline in GDP per capita growth In a seminal paper Imbs and

5 per cent decline in gdp per capita growth in a

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percent increase in exports concentration is associated with a 0.5 per cent decline in GDP per capita growth. In a seminal paper, Imbs and Wacziarg (2003) showed that the relationship between exports diversification and economic development (measured by per capita GDP) is broadly positive for countries with per capita incomes of $10,000 (2000 US dollars). Countries with incomes higher than $10,000 tend to specialize in goods. Hesse (2006) confirms that the relationship between exports diversification and economic growth continues to be positive. Agosin (2007) provides an evidence that exports diversification has stronger impact on the growth of income per capita if a country’s aggregate exports grow as well. However, there is also a literature suggests that countries benefit from concentration. Imbs and Wacziars (2003) find a U-shape pattern of relationship between income per capita and domestic sectoral concentration across countries. Klinger and Lederman (2006) and Cabellero and Cowan (2006) show that, the most advanced economies benefit from more concentrated exports structure. Mohan and Watson (2011) show that Caribbean countries first diversify and subsequently respecialize. Aditya and Sinha (2010) finds that economic growth across countries increases with diversification of exports up to a critical level of exports 5
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concentration which is then reversed with increasing specialization leading to higher growth. Ferdous (2011), concluded that GDP of the exporting country tend to be positively related with the specialization of that economy. The ESCAP (2004), using 1973-2001 long term data establishs that in Malaysia both horizontal and vertical exports diversification variables have statistically significant effect on total exports, in Nepal and Bangladesh only vertical diversification has positive statistically significant effect, while in Myanmar neither of the diversification variables have statistically significant influence on total exports growth. 4. Data Description Data used in our study are annual data, and the main variables are real gross domestic product (constant US$ 2000) ( RGDP) and the Herfindahl Index (HH) index to represent the exports diversification. We also include four control variables in order to get rid of any misleading results, which are real gross capital formation (constant US$ 2000) (GCF), population (POP), the degree of openness (OPE) , secondary school enrollment (SCH) to represent the human capital, and the WTO accession as a dummy variable to capture the effect of country integration with other world. For Jordan model, we used annual data for the period 1975 to 2010, while for the selected ARAB countries including Jordan we use annual data for the period 1990 to 2010 constrained by data availability. The main sources of the data are the World Development Indicators (WDI) data base website and the World Integrated Trade Solution (WITS) website. We used two exports diversification indices. The first index of exports diversification is the Hirschman and Herfindahl Index (HHI) : Where xi is the exports value of a specific commodity i, X is the country’s total exports, and N is the number of exports products at the
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  • Endogenous growth theory, Exogenous growth model

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