importance of natural resource exports— or growth volatility, the coefficient estimate of trade openness continues to be significant but becomes smaller.

Export market concentration (as proxied by the Herfindahl index of exports from a certain country to its trading partners) has a positive impact on growth. The sign of this coefficient estimate is different in nature to what we expected; however, it is not robust across the different specifications. Diversifying export destinations may not necessarily have a robust impact on economic growth. In contrast, export product concentration (measured by the Herfindahl index of export products) has an expected negative and significant effect on growth. The coefficient estimate of export product concentration remains slightly invariant to the inclusion of additional control variables in Table 2 (around -0.27 and -0.29). This finding implies that product diversification of exports would foster economic growth.

**Table 2. Trade openness, diversification and growth: Baseline Specification** _Dependent Variable: Growth of real GDP per worker (5-year averages) Estimation method: GMM-IV System Estimator (Arellano and Bover, 1995; Blundell and Bond 1998)_

||[1]|[2]|[3]|[4]|[5]|
|---|---|---|---|---|---|
|_Convergence_||||||
|Initial GDP per worker|-0.022<sup>***</sup>|-0.021<sup>***</sup>|-0.029<sup>***</sup>|-0.022<sup>***</sup>|-0.030<sup>***</sup>|
|_(in logs)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|
|_Trade Openness_||||||
|Exports and Imports|0.052<sup>***</sup>|0.041<sup>***</sup>|0.016<sup>**</sup>|0.039<sup>***</sup>|0.015<sup>**</sup>|
|_(% of GDP, logs)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|
|_Trade Diversification_||||||
|Market concentration|..|0.006|0.015<sup>***</sup>|0.007<sup>*</sup>|0.016<sup>***</sup>|
|_(Herfindahl index)_||_(-0.060)_|_(0.000)_|_(-0.019)_|_(0.000)_|
|<br>Product concentration|..|<br>-0.028<sup>***</sup>|<br>-0.029<sup>***</sup>|<br>-0.027<sup>***</sup>|<br>-0.029<sup>***</sup>|
|_(Herfindahl index)_||_(0.000)_|_(0.000)_|_(0.000)_|_(0.000)_|
|_Natural Resource Exports_||||||
|Natural resource exports|..|..|0.025<sup>***</sup>|..|0.028<sup>***</sup>|
|_(% of GDP)_|||_(0.000)_||_(0.000)_|
|<br>Natural resource exports|..|..|<br>-0.0319<sup>***</sup>|..|<br>-0.0338<sup>***</sup>|
|_(% of total exports)_|||_(0.000)_||_(0.000)_|
|_Volatility_||||||
|Growth volatility|..|..|..|-0.091<sup>*</sup>|-0.092<sup>*</sup>|
|_(S.D. growth per worker)_||||_(-0.015)_|_(-0.01)_|
|<br>Constant|0.02|0.01|0.120<sup>***</sup>|<br>0.02|<br>0.133<sup>***</sup>|
||_(-0.395)_|_(-0.75)_|_(0.000)_|_(-0.158)_|_(0.000)_|
|Observations|1059|875|842|875|842|
|AR(1)|0.000|0.000|0.000|0.000|0.000|
|AR(2)|0.624|0.341|0.420|0.171|0.176|
|Hansen|0.012|0.072|0.428|0.135|0.448|

_p_ -values in parentheses * _p_ < 0.05, ** _p_ < 0.01, *** _p_ < 0.001 For both natural resource exports variables, we find a different impact on economic growth (as a percentage of GDP and natural resource exports as a percentage of total exports). The former explanatory variable has a positive and significant coefficient while the latter has a negative and significant coefficient. This finding largely suggests that: (a) the concentration of natural resource in total exports may hinder growth —to the extent that the export base is sensitive to international commodity prices and, hence, more volatile; and (b) natural resource sectors as part of _page 19_