Export diversification and exchange-rate regimes: Evidences from 72 developing countries

Drawing on a new dataset of diversification of export products, the paper makes the first attempt in the empirical literature to test the impact of product diversification on the choice of exchange-rate regimes in a sample of 72 developing countries (1974-2010). The paper finds that diversification of export products has a positive but insignificant effect on the choice of fixed exchange-rate regimes. When export diversification is decomposed into the extensive and intensive margins, evidences of the paper show that higher level of product diversification at the extensive margin has a statistically positive effect on exchange-rate regime choices while the intensive margin has a negative but insignificant impact on the choice.