High Export Concentration Index: A Cause for Economic Concern

Iran’s Export Concentration Index, which estimates a country’s reliance on a limited group of commodities as its primary source of foreign exchange income, stood at 0.43 in 2019, about six times higher than that of Turkey and Poland. 
According to a report by ILNA, citing the Economic Analysis Center of Tehran Chamber of Commerce, Industries, Mines and Agriculture, the high concentration score must be a concern for economic planners as it suggests the country’s trade vulnerability to changes in global demand. 
The index is calculated as a sum of squared shares of products constituting a country's exports. Ranging from 0 (perfect diversification) to 1 (concentrated on a single product), a comparison of index scores to the contribution of natural resources to GDP worldwide shows that resource-rich countries tend to have a less diversified export base.
Among 13 countries surveyed by TCCIM, Iran ranks first in the index with a score of 0.43 and Turkey and Poland come last with a score of 0.07. After Turkey and Poland, the Southeast Asian country Thailand scored 0.08. It was followed by China (0.09), India (0.12), Indonesia (0.14), Mexico (0.15), Brazil (0.16), Vietnam (019), Malaysia (0.23), Georgia (0.25) and Russia (0.34).