An Investigation of the Relationship between Export Product Diversification and Economic Growth in the context of Middle Income Trap

The concept of middle income trap (OGT) is the situation in which countries have remained in the same income group for a long time and have lost international competitiveness. Kanchoochat and Intarakumnerd (2014) indicate that countries should move towards diversity in their export composition to escape from the OGT. In the study, following Robertson and Ye (2013)’s work, selected countries for the period 1995-2017 are divided into two groups: countries in the OGT and countries which escaped from the OGT (KOGT). In the analysis, the relationship between Herfindahl-Hirschman Index and economic growth examined employing panel data analysis. The results show that while the economies of countries with OGT are affected by the export diversity positively, the countries escaped from OGT (KOGT) are negatively. The findings show that middle income countries should focus on product diversification in exports and countries that escaped from middle income countries should focus on export specialization.