Abstract
AbstractThe Ricardian comparative advantage model suggests doing what you are best at. Meanwhile, many development experiences resulted in producing the impossible. Do the two prescriptions lead to an antagonism that the industrial policy must side by one? Or can industrial policy consider the current comparative advantage while aiming for significant changes in the export basket? This paper answers yes by suggesting a path to transformation through the tracks of current comparative advantage. I use the Product Space network to define the two attributes of a product: New products closer to the existing comparative advantage are easier to include in the export basket. On the other hand, central products in the core of the product space might be far from the export basket, but once added, they contribute more to the transformation and further diversification. Hence, a trade‐off exists between the proximity of a new product to the current export basket and its contribution to further diversification and transformation. I offer industrial policymakers to use a combination of product nearness and centrality. A policymaker seeking a gradual and secure transformation can prioritize nearness, while centrality can be given greater weight for rapid transformations.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
