IMPLICATIONS OF NEW TRADE AND ENDOGENOUS GROWTH THEORIES FOR DIVERSIFICATION POLICIES OF COMMODITY-DEPENDENT COUNTRIES

New trade and endogenous growth theories are discussed, and their findings taken to interpret technological innovation and human-capital accumulation as being the engines of structural diversification. Structural diversification is seen as being the result of dynamic learning sequences, where introducing new technology provides learning-by-doing benefits which, however, peter out once activities associated with the new technology have been repeated many times; new and more sophisticated technology is needed to continue reaping learning effects. Diversification policy should encourage skill-upgrading, for example by refocusing education policy and fostering the production of products that are one step higher on the skill ladder than those presently produced, independently of whether those products are considered commodities or manufactures in common product classifications. Associated policy actions for technology development and human capital accumulation are outlined.