Export Diversity.

One keeps on hearing this mantra of how Pakistan desperately needs diversification in its exports and why it matters. For example, how the current basket is unhealthily skewed towards the textile industry and why its weightage in the overall export basket has to be reduced; easier said than done. Justifications range from diversity being: a harbinger of greater market access; a business asset that improves performance to it simply being the right thing to do. Indeed, the clarion call for improved diversity has been adopted at the very highest levels. What is more, even leading economic consultancies and global financial institutions draw marked attention to it and how diversification can in fact downgrade national economic risk and at the same time open up the pot of opportunities for a country. Given the diversity rhetoric that is all around us, there has been surprisingly little consideration on the impact of what it can actually do to the structure of an economy if conducted without grappling with the possible fallouts, meaning undertaking diversity just for the sake of it. A recent study from Yale investigates some justifications that economic managers use to explain their commitment to export diversity, and how these justifications in turn affect the economic performance itself.

Basically, we see that national decision makers or the experts recommending it use two broad cases to justify their commitment to export diversity-the 'fairness case' (e.g., 'We value diversity because it is the right thing to do'), and the 'business case', which argues that such diversity is valuable because it benefits an economy's performance and ultimately its bottom line. One is here also familiar with the typical business-case language, which communicates that with more and more sectors operating efficiently at the same time, the resultant environment tends to increasingly engage and promote people of different skills, perspectives, experiences, and working styles and that it is precisely these 'unique contributions' that drive the success of diverse economies, giving them the luxury that if one sector slows down there is always another one to compensate for it. Now what the researchers at Yale did was to create an algorithmic model that used Artificial Intelligence to analyse what the Fortune 500 companies say about diversity (using publicly available text drawn directly from their websites). Their argument is that when the case is expanded the outcome...