EXPORT STRUCTURE AND ECONOMIC PERFORMANCE IN DEVELOPING COUNTRIES: EVIDENCE FROM NONPARAMETRIC METHODOLOGY

The objective of the paper is to use nonparametric methodology to examine the relationship between skill and technology intensive manufacture exports and gross domestic product (GDP) per capita, controlling for institutional quality and human capital in developing countries. The paper uses the Li-Racine (2004) generalized kernel estimation methodology to examine the role of skill and technology content of the exports in understanding differential level of economic performance across countries and country groups. In the extended model, we also control for other factors that influence economic performance such as availability of financial capital and effective foreign market access of exports of developing countries. The paper uses the database from the United Nations COMTRADE Harmonized System (HS) four-digit level of disaggregation to provide new system of classification of traded goods by assigning each one of them according to their skill and technology content as proposed in Basu (forthcoming). The analysis is carried out for a set of 88 developing countries over 1995 to 2007. Similar to parametric results, the nonparametric analysis lends further support to the view that as the skill and technology content of the exports increase, the impact on GDP per capita increases positivity and significantly as well, after controlling for other policy variables.