Does sectoral concentration matter for export competitiveness?

This paper aims to contribute to a better understanding of the relationship between sectoral concentration and export competitiveness, using countries’ annual share of world exports (1995–2021) as a proxy for competitiveness. Results are also discussed for a specification estimated without China, treated as a structural outlier, to explore potential heterogeneity among developing economies. To achieve these objectives, we employ panel-data econometric techniques using G2SLS and IV-GMM estimators. Our main results reveal a positive relationship between sectoral specialization and export competitiveness. However, the impact of specialization is conditional upon (i) the degree of diversification relative to the global portfolio and (ii) the share of primary products in the export basket. Specifically, the findings indicate that international competitiveness is enhanced when specialization targets products with high global demand, contingent on a productive structure with a greater manufacturing share in GDP.