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The Product Space and Its Consequences for Economic Growth

The Product Space and Its Consequences for Economic Growth. Cesar A. Hidalgo R. B.Klinger, A.-L. Barabasi, R. Hausmann. Center for Complex Network Research Department of Physics University of Notre Dame. Center for International Development Kennedy School of Government Harvard University.

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The Product Space and Its Consequences for Economic Growth

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  1. The Product Space and Its Consequences for Economic Growth Cesar A. Hidalgo R.B.Klinger, A.-L. Barabasi, R. Hausmann Center for Complex Network Research Department of Physics University of Notre Dame Center for International DevelopmentKennedy School of Government Harvard University

  2. Area of countries proportional to ppp (GDP per Capita). Source: worldmapper.org

  3. 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 fij=P(RCAi|RCAj) Fij = min{P(RCAi|RCAj),P(RCAj|RCAi)} B. Balassa, The Review of Economics and Statistics68, 315 (1986).

  4. Feenstra’s 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: 1962-2000”NBER working paper 11040. National Bureau of Economic Research, Cambridge MA.

  5. Threshold = 0.55 Number of Links = 1525

  6. MALAYSIA

  7. Malaysia 1975

  8. Malaysia 1980

  9. Malaysia 1985

  10. Malaysia 1990

  11. Malaysia 1995

  12. Malaysia 2000

  13. Density Discovery Factor wj = Fraction of the product space that seems to be developed fromthe jth product perspective Hj = Increase in density betweentransition product and undevelopedproducts.

  14. Discovery Factor Density

  15. P(transition | closest developed product is at proximity f)

  16. KEY Denotes where region has RCA

  17. 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

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