From double diversification to efficiency and growth

The paper discusses economic and political diversification as two sides of the same coin, presenting them as parallel potential determinants of long-run economic efficiency and growth. Three different measures of economic diversification are discussed: the FingerKreinin index of export diversification, the Herfindahl-Hirschman index of market concentration, and the Theil index of export diversification. Three measures of political diversification are also discussed: indices of political liberties and civil rights as well as the Polity2 index of democracy. All six measures of diversification are shown to vary directly with one another as well as with per capita incomes across a large sample of
countries.