DIVE tool manual - Diversifying industries and value chains for exports

While there is strong consensus on the need to promote diversification, there is far less agreement on how to design and implement diversification and industrial strategies. One fundamental requirement for a successful policy is an analysis of the current productive landscape, in particular the features of the country's existing export and production basket and its dynamism. Such an analysis is a prerequisite for outlining potential paths for industrial development.

The main objective of UNIDO’s DIVE tool is to provide strategic guidance that will contribute to the design of production and export diversification policies. The key question we address is which direction an economy should take and specifically, whether it is desirable to exclusively diversify into new products that rely on the set of capabilities that are already available and linked to existing endowments (related products) or whether on the contrary, it is feasible to develop new specializations in products that have limited similarity with the country's existing production structure (unrelated products). Whether to aim for ‘short jumps’ by pursuing specializations in related products or ‘long jumps’ by promoting the development of a comparative advantage in unrelated and more ‘distant’ products, is a fundamental component in policy design, which has often been explored but with little empirical guidance and rigour.