thanks Paul, that was very informative and has helped me on the issue, but i have an additional question, what are the possible types (nature) of data that can be used into the formulas, i mean, what measurement can be used capture product/business diversification, i have seen some using business sectors industry classification systems, so how specifically do you enter such data in STATA, am i going to use dummies, if so how..., please give a small example... thanks in advance

thanks a lot Paul, let me work on it and see what happens.

good day.

To calculate the entropy measure of product/business diversification in STATA, you can use the trade entropy index. The trade entropy index is defined as the sum across destinations of the squared export shares for the region under study to all destinations. You can also calculate geographical sales dispersion by using entropy index of company sales per country.