Latent Trade Diversification

[Aishwarya Nahata]

Hello everyone,

I am trying to replicate the work done by Daniel Lederman, Samuel Pienknagura and Diego Rojas on Latent Trade Diversification and Its Relevance for Macroeconomic Stability for a specific country in Africa. Access to paper: https://openknowledge.worldbank.org/...=1&isAllowed=y

Any suggestions on the codes if anyone has done this before? Thank you.

[Nick Cox]

I glanced at this paper which is 54 pages long and out of my field. But I spotted numerous references to the Herfindahl-Hirschman index which naturally was invented by Gini much earlier than either author. Whatever it is called, there are numerous questions and answers on it here and many Stata resources ranging from full blown command to how to do it in about two lines, but everything hinges on the format of your data. Despite the profoundly unhistorical naming of this measure by many economists, "Herfindahl" is a good search term for this forum as no one it seems is now interested in anything else he did.

Hope that helps a little, but otherwise you're asking for code for an entire project and may not get much response.

[Aishwarya Nahata]

Dear Nick, Thank you for your response. I calculated the Herfindahl-Hirschman index, but this paper also uses several other proxies for Latent Trade Diversification. But you answer helps me, and perhaps I will just focus on the HHI for now. Thank you.