Found 5 article(s) for author 'Diversification'

Machine-learned patterns suggest that diversification drives economic development

Machine-learned patterns suggest that diversification drives economic development. Ricardo Hausmann, Matthew Bonds, December 11, 2018, Paper, “We develop a machine-learning-based method, Principal Smooth-Dynamics Analysis (PriSDA), to identify patterns in economic development and to automate the development of new theory of economic dynamics. Traditionally, economic growth is modeled with a few aggregate quantities derived from simplified theoretical models. Here, PriSDA identifies important quantities. Applied to 55 years of data on countries’ exports, PriSDA finds that what most distinguishes countries’ export baskets is their diversity, with extra weight assigned to more sophisticated products. The weights are consistent with previous measures of product complexity in the literature. The second dimension of variation is a proficiency in machinery relative to agriculture. PriSDA then couples these quantities with per-capita income and infers the dynamics of the system over time. According to PriSDA, the pattern of economic development of countries is dominated by a tendency toward increased diversification. Moreover, economies appear to become richer after they diversify (i.e., diversity precedes growth). The model predicts that middle-income countries with diverse export baskets will grow the fastest in the coming decades, and that countries will converge onto intermediate levels of income and specialization. PriSDA is generalizable and may illuminate dynamics of elusive quantities such as diversity and complexity in other natural and social systems.” Link

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The workforce of pioneer plants: The role of worker mobility in the diffusion of industries

The workforce of pioneer plants: The role of worker mobility in the diffusion of industries. Ricardo Hausmann, October 2018, Paper, “Because many skills are tacit and specific to an industry, the diffusion of industries and the technologies they employ often requires that workers skilled in the use of these technologies relocate to the new region…Link

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Do the Rich Get Richer in the Stock Market? Evidence from India

Do the Rich Get Richer in the Stock Market? Evidence from India. John Y. Campbell, March 2018, Paper, “We use data on Indian stock portfolios to show that return heterogeneity is the primary contributor to increasing inequality of wealth held in risky assets by Indian individual investors. Return heterogeneity increases equity wealth inequality through two main channels, both of which are related to the prevalence of undiversified accounts that own relatively few stocks. First, some undiversified portfolios randomly do well, while others randomly do poorly. Second, larger accounts diversify more effectively and thereby earn higher average log returns even though their average simple returns are no higher than those of smaller accounts.Link

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Bureaucrats as managers and their roles in corporate diversification

Bureaucrats as managers and their roles in corporate diversification. Felix Oberholzer-Gee, March 8, 2017, Paper, “We examine the diversification choices and financial performance of companies run by former bureaucrats in China. We find that the ex-bureaucrat led companies are involved in more diversified business lines than other firms managed by professionals without such government backgrounds. While former bureaucrats that manage state-owned enterprises (SOEs) tend to operate in unattractive industries, those who manage private firms do businesses in more profitable, faster-growing, and more related industries. The diversification of private firms is helped by additional borrowing capacity brought in by ex-bureaucrat CEOs, while no such financing effect is found in SOEs. The overall diversification performance associated with bureaucrat CEOs is positive in private firms, but not in SOEs. As manifested by the different diversification strategies and outcomes between private firms and SOEs, the government-linked CEOs facilitate transfers of critical business resources that benefit either owners’ or governments’ goals.Link

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The network structure of economic output

The network structure of economic output. Ricardo Hausmann, October 2011, Paper. “Much of the analysis of economic growth has focused on the study of aggregate output. Here, we deviate from this tradition and look instead at the structure of output embodied in the network connecting countries to the products that they export. We characterize this network using four structural features: the negative relationship between the diversification of a country and the average ubiquity of its exports, and the non-normal distributions for product ubiquity, country diversification and product co-export…” Link

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