Three advantages and three disadvantages of export diversification

Chile is a recent example of country whose economic policy is based on export-led industrialization as Chile's economy took off in the midst of the 80s.
This tremendous change from everything that had been done before in the country had huge consequences on its economy in general, affecting every sector of the economy.
Before going into details, one has to differentiate vertical exports diversification and horizontal diversification as they have different goals and consequences. Vertical diversification puts the emphasis on quality, which means traditionally a diversification out of primary into manufactured exports. Horizontal diversification traditionally means exporting new products that were not previously produced by the country. One can easily grasp on why vertical diversification might be beneficial to the country as manufactured goods are more profitable than primary goods. Concerning horizontal diversification, the point is to "generate positive externalities on the rest of the economy as export oriented sectors gain from dynamic learning activities due to contacts to foreign purchasers and exposure to international competition" . A final reason why diversification is beneficial to the economy is because through diversification, exports become less vulnerable to changes of price. Many developing countries rely on only one good, generally a primary good and any change of price affects the whole economy dramatically and this is why for example the Ivory Coast is so sensitive to the price of cacao as the world first producer.