Exports of developing countries: differentiation and comparative advantage

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Abstract
Differentiation among developing countries is a much-discussed phenomenon, mostly without being established in a consistent way. Differentiation implies both diversification of exports and differences between developing countries in this respect. It is the purpose of this article to measure differentiation among developing countries comprehensively and to relate this to changes in comparative advantage. Therefore, Theil's entropy index is applied to the manufactured exports of 100 developing countries over a period of 25 years, at the two- and three-digit level of the international-standard industrial classification. Both aspects of differentiation are confirmed. Manufacturing exports have, indeed, diversified for most developing countries, and some countries have been more successful than others. The latter group has increased its share in exports of developing countries by diversifying away from resource-intensive products toward more advanced products.

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