COMCEC Trade Outlook 2018
15
The resilience of a country against external economic shocks varies depending on among others
the degree of export diversification. One common measure of concentration is Herfindahl-
Hirschmann Index (HHI) 12 which can take values between 0 and 1 where being close to 0
indicates well diversified exports while a higher value indicates greater concentration of exports
on a few commodities. Figure 16 illustrates the evolution of product diversification in the OIC
compared to world and developed and developing countries for the period 2007-2016
measured by HHI. Developed countries export product diversification has not changed much as
these countries have more stable and mature export structures13. This measure shows a modest
tendency towards increasing product diversification in the OIC countries whereas developing
countries achieved a more diversified exports structure in the same period. Moreover, the
product concentration in the OIC countries exports are well above than those of world and
developing countries. OIC has a HHI of 0.26 whereas world and developing countries have HHI
of 0.06 and 0.09 respectively in 2017.
Figure 16: Evolution of Herfindahl-Hirschmann Index (Product HHI)
Source: UNCTAD STAT
Figure 17 illustrates product diversification of OIC countries’ exports in 2017 measured by
Herfindahl index. All OIC countries has a more concentrated export product structure compared
to world averages. According to the Herfindahl index Turkey has the most diversified export
product structure amongst the OIC countries with a HHI of 0.08 followed by other manufactures
exporters of OIC as Tunisia, Indonesia, Lebanon and Egypt. On the other hand some major oil
exporters have a very concentrated export product structure such as Iraq (HHI: 0.94),
Azerbaijan (HHI:0.81), Kuwait (HHI: 0.63) and Saudi Arabia HHI:(0.59).
12 The Herfindahl-Hirschmann Index (HHI) is calculated by taking the square of export shares of all export categories in the
market: This index gives greater weight to the larger export categories and reaches a value of unity when the country
exports only one commodity
13 WTO World Tariff Profiles, 2017
0.0
0.1
0.1
0.2
0.2
0.3
0.3
0.4
0.4
0.5
0.5
HHI Product Index
World Developing economies Developed economies OIC