Technological regimes and catching up in the product space[Demand saturation-creation and economic growth]

This article proposes a micro-founded model of countries’ diversification trajectories in the product space. We argue that the type of technological regime under which countries operate conditions their export performance and diversification trajectories. In particular, repeated simulations show that countries with firms operating under an entrepreneurial regime expand their export basket faster when most other countries are characterized by a routinized regime. Simulations also show that catching-up trajectories in the product space are less likely when all countries operate under the same technological regime.