The aim of this paper is to study driver forces of export diversification in Middle East and North Africa. We run an empirical model by using panel data of twelve MENA countries over the period 1984-2009 to detect main key factors of export diversification in our sample. To deal with the potential endogeneity problem of explanatory variables (feedback effects) we use instrumental variables. We find an inverted-U shape relationship between economic development and diversification. Moreover, estimation results show that endowments of natural resources explain the export concentration in this region. By contrast, openness and accumulation of physical capital (foreign and domestic) lead to more export diversification.
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