Export diversification and Export incomes Fluctuation in Agricultural Sector: Application of Panel-VECM in Developed Countries

Export diversification is one of the economic growth main components. Also, accepting the agricultural sector importance in the current economy, attention to export diversification in this sector is necessary. This study examines the factors affecting export incomes fluctuation in the agricultural sector. The main purpose is this question whether there is a direct relationship between the agricultural exports diversification and the export incomes stability in this sector. The instability of agricultural export incomes was calculated using the Love Index and the exports diversification was calculated using the Herfindahl Index. The panel vector error correction model and fully modified least squares method has been used to estimate the relationship between variables in 20 developed countries over the period 2004-2018.The findings of this study show the concentration of exports, the instability of GDP, the instability of the real exchange rate, the instability of the inflation rate are positively related to the export incomes fluctuation in of this sector. These findings suggest that countries need to diversify their agricultural exports and develop economic cooperation with other countries.