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The objective of this paper is to look at how development of physical and human capital affects the structure of exports from developing countries. As a country becomes increasingly developed, it moves away from production in primary goods to production of manufactures. This structural change will also be reflected in its exports. The more developed a country is in terms of human and physical capital the higher will be its manufacturing exports. This hypothesis is tested empirically. Factors like education, per capita income, infrastructure and capital investment are used to capture human and physical capital development, while the percentage of manufacturing exports in the total captures structural change in trade. This paper analyzes data from four SE Asian countries for the years 1980 to 1995. The results show that human and physical capital are positively related to manufacturing export growth. This result implies that besides policy changes to make the economy export friendly, Governments in developing countries need to pay attention to development of human and physical.



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