The Product Space and Its Consequences for Economic Growth Cesar A. Hidalgo R. B.Klinger, A.-L. Barabasi, R. Hausmann Center for International Development Kennedy School of Government Harvard University Center for Complex Network Research Department of Physics University of Notre Dame
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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 Development.
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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 ResearchDepartment of PhysicsUniversity of Notre Dame
Area of countries proportional to ppp (GDP per Capita). Source: worldmapper.org
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
ij=P(RCAi|RCAj)ij=P(RCAi|RCAj)
ij = min{P(RCAi|RCAj),P(RCAj|RCAi)}
B. Balassa, The Review of Economics and Statistics 68, 315 (1986).B. Balassa, The Review of Economics and Statistics 68, 315 (1986).
Feenstra’s Trade Flows(1)
(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.
sitc-4 import and export data.
Threshold = 0.55
Number of Links = 1525
MALAYSIA
Malaysia 1975
Malaysia 1980
Malaysia 1985
Malaysia 1990
Malaysia 1995
Malaysia 2000
Density
j = Fraction of the product space
that seems to be developed fromthe jth product perspective
TN
TH N
Tk
kj
T
k
kj
j
1
1
Discovery Factor
Hj = Increase in density betweentransition product and undeveloped
products.
Discovery Factor
Density
P(transition | closest developed product is at proximity )
Denotes where region has RCA
KEY
ConclusionWe 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