The Product Space and Its Consequences for Economic Growth

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The Product Space and Its Consequences for
Economic Growth

• Cesar A. Hidalgo R.B.Klinger, A.-L. Barabasi, R.
  Hausmann

Center for International DevelopmentKennedy
School of Government Harvard University
Center for Complex Network Research Department of
Physics University of Notre Dame
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Area of countries proportional to ppp (GDP per
Capita). Source worldmapper.org
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Share of the ith product on the basket of country
c at time t
Share of the ith product on the basket of the
world at time t
fijP(RCAiRCAj)
Fij minP(RCAiRCAj),P(RCAjRCAi)
B. Balassa, The Review of Economics and
Statistics 68, 315 (1986).
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Feenstras Trade Flows(1)
sitc-4 import and export data.
(1) Feenstra, R. R. Lipsey, H. Deng, A. Ma and H.
Mo. 2005. World Trade Flows 1962-2000NBER
working paper 11040. National Bureau of Economic
Research, Cambridge MA.
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Threshold 0.55 Number of Links 1525
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MALAYSIA
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Malaysia 1975
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Malaysia 1980
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Malaysia 1985
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Malaysia 1990
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Malaysia 1995
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Malaysia 2000
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Discovery Factor
Density
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P(transition closest developed product is at
proximity f)
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KEY
Denotes where region has RCA
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Conclusion
We showed

• Product space is heterogeneous
• Constrains the development of RCA
• Rich and poor countries are located in distinct
  places of it

• Development Strategies should be different for
  rich and poor countries
• The structure of the space preventseconomical
  convergence