Abstract

This paper estimates the impact of regional export structures on the risk and
return of regional export portfolios. The Markowitz model is used to assess the risk and
return of export products structures of three Brazilian economic regions. More specifically,
the paper tests the hypothesis that economic regions with highly diversified export structure
will observe more efficient export portfolios than those with only moderate or no portfolio
diversification. In order to test this hypothesis, we used the export structures of three
Brazilian economic regions: the South, the Southeast and the Northeast. The results show
that portfolio theory can provide policymakers with an alternative way of assessing export
earnings instability and export promotion strategies.

JEL Classification: F1; F3.