<p>At the HS6 level, there are thousands of product codes (I believe around 5,000) so if you're just computing the HHI using product codes, then actually it's pretty surprising you've received such a large number! However, for the interpretation of your result you should keep in mind that you've computed the export HHI of Chile using HS6 product codes, which definitely do not correspond to a more common, yet harder to define, notion of "commodities".</p>

<p>For example, there are many product codes that can be said to be copper related, and refer to various forms of smelted and refined copper. For instance, the HS6 code (in the HS1992 nomenclature) for copper ore is 260300, but there are dozens of product codes for refined copper and related products (i.e. 740110, 740120, 740200, etc.). Do you want to treat all these as separate products? It depends on the question you want to ask. </p>

<p>For instance, if you wanted to ask what the export HHI of Chile is for commodities, then you would need to define what a commodity is, and which HS codes you want to aggregate into commodities such as "nickel", "copper", etc.. and then compute the HHI based on the export shares of these groupings. There are <a href="https://are.berkeley.edu/~fally/Data/commodity_hs6_correspondence.xlsx" rel="nofollow noreferrer">pre-existing groupings of commodities</a>, but the "right" aggregation will depend on your question.</p>

CC BY-SA 4.0
2018-12-13T06:03:39.230Z
2018-12-13T06:03:39.230Z
Jay
<p>I calculated the HHI index for Chile exports and got values ranging from 0.09 and 0.13. We know that Chilean exports are very concentrated (around 40% of the exports are copper related goods) and the index might be misleading. I used HS 6 digits with the Customs data and Comtrade data. I am really puzzled and appreciate any help. Thanks.</p>

<international-trade>
HHI and concentration
Juliana Dornelles
# HHI and concentration

(Asked by: username_0 on 2018-12-12)

I calculated the HHI index for Chile exports and got values ranging from 0.09 and 0.13. We know that Chilean exports are very concentrated (around 40% of the exports are copper related goods) and the index might be misleading. I used HS 6 digits with the Customs data and Comtrade data. I am really puzzled and appreciate any help. Thanks.

**Tags:** international-trade

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## 1 answers

### Answer by username_1 on 2018-12-13. Score: 1

At the HS6 level, there are thousands of product codes (I believe around 5,000) so if you're just computing the HHI using product codes, then actually it's pretty surprising you've received such a large number! However, for the interpretation of your result you should keep in mind that you've computed the export HHI of Chile using HS6 product codes, which definitely do not correspond to a more common, yet harder to define, notion of "commodities".

For example, there are many product codes that can be said to be copper related, and refer to various forms of smelted and refined copper. For instance, the HS6 code (in the HS1992 nomenclature) for copper ore is 260300, but there are dozens of product codes for refined copper and related products (i.e. 740110, 740120, 740200, etc.). Do you want to treat all these as separate products? It depends on the question you want to ask.

For instance, if you wanted to ask what the export HHI of Chile is for commodities, then you would need to define what a commodity is, and which HS codes you want to aggregate into commodities such as "nickel", "copper", etc.. and then compute the HHI based on the export shares of these groupings. There are [pre-existing groupings of commodities](https://are.berkeley.edu/~fally/Data/commodity_hs6_correspondence.xlsx), but the "right" aggregation will depend on your question.


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