Objective: The aim of this tool is to help analysts find out whether a country’s industrial and export structures are diversified or rather concentrated in a few activities/sub-sectors and markets. It covers both domestic and export dimensions and points to different possible approaches to measure the degree of diversification (or, conversely, concentration) of a country’s manufacturing sector, export basket and export markets.
Key questions addressed:

How concentrated – or, conversely, how diversified – is a country’s productive structure? Is its industrial sector dominated by a few sub-sectors only? If so, which ones?

How concentrated or diversified is a given country’s export structure? That is, is the country’s export basket dominated by a few products only? Are its exports concentrated in a few export markets only? Which are the dominant products and markets?

How has all this changed over time in the recent past? Has the country been diversifying its productive and export structures?

How does the degree of diversification of the country’s productive and export structures compare to peer or benchmark countries?

What are promising avenues to (further) diversify? Which new/additional export markets could be targeted? Which products or product groups could a country possibly add to its export basket to increase diversification?

Indicators used:

Share of top-3 manufacturing sub-sectors in total Manufacturing Value Added (MVA)

Share of top-3 manufactured exports in total exports

Hirschman-Herfindahl Index (HHI) for the domestic industry, for export products and for export markets

Manufactured product diversification index (MPDI)

Export market diversification index (EMDI)


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