The Product Space Conditions the Development of Nations

By César A. Hidalgo, B. Klinger, Albert-László Barabási, Ricardo Hausmann. 2007

2,890 citations recorded by the source corpus.

Economies grow by upgrading the products they produce and export. The technology, capital, institutions, and skills needed to make newer products are more easily adapted from some products than from others. Here, we study this network of relatedness between products, or “product space,” finding that more-sophisticated products are located in a densely connected core whereas less-sophisticated products occupy a less-connected periphery. Empirically, countries move through the product space by developing goods close to those they currently produce. Most countries can reach the core only by traversing empirically infrequent distances, which may help explain why poor countries have trouble developing more competitive exports and fail to converge to the income levels of rich countries.

Subfields: Economics and Econometrics, Strategy and Management

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

In Strategy and Management

Citations in the corpus

Inter-industry labor flows (2017, methodology): “…and Robinson, 2008; Gathmann and Schönberg, 2010) and economic eography (Porter, 2003; Neffke et al., 2011; Boschma et al., 2013) to development economics (Hidalgo et al., 2007) and trategic management (e.g., Teece et al., 1994; Farjoun, 1994; Bryce and Winter, 2009; Lien and Klein, 2009).”
Agents of Structural Change: The Role of Firms and Entrepreneurs in Regional Diversification (2018, background): “At the national level, Hidalgo et al. (2007) show that countries diversify their export portfolios in accordance with such a branching logic, whereas Neffke, Henning, and Boschma (2011) show that similar processes are at work in Swedish regions, a finding that has been replicated in numerous…”
Can Entrepreneurial Activity be Taught? Quasi-Experimental Evidence from Central America (2011, background): “At the macro level, Hausman and Rodrik (2003) and Hidalgo et al. (2007) provide theoretical and empirical evidence that supports similar ideas.”
Toward understanding the impact of artificial intelligence on labor (2019, background): “We control for ubiquitous skills be normalizing raw skill importance across all occupations according to their revealed comparative advantage [1, 2, 3] (also known as location quotient [4, 5, 6]).”
Neighbors and the evolution of the comparative advantage of nations: Evidence of international knowledge diffusion? (2014, background): “Jaffe et al. 1993; Branstetter, 2001; Keller, 2002; Bottazzi & Peri, 2003), an observation that is attributed to tacit knowledge. Hence, if indeed knowledge diffusion translates into productivity shifts that can shape the export basket of countries, then, in a world in which knowledge diffuses prefe”
Mapping Knowledge Space and Technological Relatedness in US Cities (2013, background): “In closely related research, Hausmann and Klinger (2007) and Hidalgo et al. (2007) employ detailed international trade data to measure the relatedness of products through patterns of co-exporting.”
Related variety and regional growth in Spain (2011, methodology): “The second relatedness measure is based on the proximity indicator developed by Hidalgo et al. (2007).”
Quantifying China's Regional Economic Complexity (2017, background): “For example, based on world trade data, ‘‘Product Space’’ was proposed which reveals the status of national economic development and explains why not all countries face the same opportunities in future development [17], and non-monetary economic complexity and fitnesswere introducedwhichhavepotentia”
Globalization, the structure of the world economy and economic development (2011, background): “Indeed, there is a growing awareness in the social sciences that factors associated with a country’s position in the IDL do matter for economic growth, including the ‘‘quality of its export basket” (Hausumann et al., 2007) or its location in the ‘‘product space” (Hidalgo et al., 2007).”
The impact of aging and technological relatedness on agglomeration externalities: a survival analysis (2012, positive): “In an international trade context, Hidalgo et al. (2007) have shown that the technological position of the current export portfolio of a country vis-à-vis other product categories largely determines into which product categories a country can successfully diversify.”
Climbing the Ladder of Technological Development (2017, positive): “At country level, the pioneering study of Hidalgo et al. (2007) shows that countries are able to develop products which are close (in terms capabilities needed to produce them) to their current basket of products, providing evidence on the importance of product relatedness.”