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As You Sow So Shall You Reap: From Capabilities to Opportunities

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  • Jesus Felipe
  • Utsav Kumar
  • Arnelyn Abdon

Abstract

Long-run growth is about the structural transformation (diversification and upgrading) of the economy, itself a function of the accumulation of capabilities that allows a country to produce new and more unique products. In this paper, we develop an "Index of Opportunities" for 96 non-high-income countries. This Index summarises countries' capabilities to undergo structural transformation, as captured by their export baskets. It has four dimensions-sophistication, diversification, "standardness" and possibilities for exporting new products with revealed comparative advantage. We find that China, India, Poland, Thailand, Mexico and Brazil rank high in the index. This means that these countries have accumulated significant capabilities (as reflected in their export baskets) and hence are well positioned for further economic transformation. At the other extreme, Guinea, Malawi, Benin, Mauritania and Haiti score very poorly. While both groups of countries need to focus policy on the development of capabilities that facilitate structural transformation, the nature and degree of policy support required are very different.

Suggested Citation

  • Jesus Felipe & Utsav Kumar & Arnelyn Abdon, 2014. "As You Sow So Shall You Reap: From Capabilities to Opportunities," Oxford Development Studies, Taylor & Francis Journals, vol. 42(4), pages 488-515, December.
    • Handle: RePEc:taf:oxdevs:v:42:y:2014:i:4:p:488-515
    DOI: 10.1080/13600818.2014.950560
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    1. Jesus Felipe & Utsav Kumar & Norio Usui & Arnelyn Abdon, 2013. "Why has China succeeded? And why it will continue to do so," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 37(4), pages 791-818.
    2. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
    3. Jesus Felipe & Utsav Kumar & Arnelyn Abdon, 2014. "As You Sow So Shall You Reap: From Capabilities to Opportunities," Oxford Development Studies, Taylor & Francis Journals, vol. 42(4), pages 488-515, December.
    4. Hausmann, Ricardo & Klinger, Bailey, 2006. "Structural Transformation and Patterns of Comparative Advantage in the Product Space," Working Paper Series rwp06-041, Harvard University, John F. Kennedy School of Government.
    5. Cesar A. Hidalgo, 2009. "The Dynamics of Economic Complexity and the Product Space over a 42 year period," CID Working Papers 189, Center for International Development at Harvard University.
    6. John Sutton, 2001. "Rich Trades, Scarce Capabilities: Industrial Development Revisited," STICERD - Economics of Industry Papers 28, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    7. Sutton, John, 2001. "Rich trades, scarce capabilities: industrial development revisited," LSE Research Online Documents on Economics 2037, London School of Economics and Political Science, LSE Library.
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    Citations

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    Cited by:

    1. Rougier, Eric, 2016. "“Fire in Cairo”: Authoritarian–Redistributive Social Contracts, Structural Change, and the Arab Spring," World Development, Elsevier, vol. 78(C), pages 148-171.
    2. Chen, Xi & Funke, Michael, 2013. "The dynamics of catch-up and skill and technology upgrading in China," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 465-480.
    3. Arnelyn Abdon & Jesus Felipe, 2011. "The Product Space: What Does It Say About the Opportunities for Growth and Structural Transformation of Sub-Saharan Africa?," Economics Working Paper Archive wp_670, Levy Economics Institute.
    4. Felipe, Jesus & Kumar, Utsav & Abdon, Arnelyn, 2012. "Using capabilities to project growth, 2010–2030," Journal of the Japanese and International Economies, Elsevier, vol. 26(1), pages 153-166.
    5. JESUS FELIPE & JOHN McCOMBIE, 2011. "Some Caveats In Modelling Technical Progress And Investment: The Case Of China," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 2(02), pages 305-324.
    6. Jesus Felipe & Utsav Kumar & Arnelyn Abdon, 2010. "Using Capabilities to Project Growth, 2010-30," Economics Working Paper Archive wp_609, Levy Economics Institute.
    7. Yaroslava Babych & Michael Fuenfzig, 2012. "An Application of the Growth Diagnostics Framework: The Case of Georgia," Working Papers 001-12, International School of Economics at TSU, Tbilisi, Republic of Georgia.
    8. Soyyiğit Semanur & Michalski Bartosz, 2022. "The Economic Complexity of the Visegrád Countries and the Role of Trade with Germany," Central European Economic Journal, Sciendo, vol. 9(56), pages 219-236, January.
    9. Carla Carolina Pérez Hernández & Blanca Cecilia Salazar Hernández & Jessica Mendoza Moheno, 2019. "Diagnóstico de la complejidad económica del estado de Hidalgo: de las capacidades a las oportunidades," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 14(2), pages 261-277, Abril-Jun.
    10. Byambasuren, Tsenguunjav & Gochoo, Munkh-Erdene, 2015. "Optimizing the Structure of Mongolian Foreign Trade and the Alternative Policy of Successful Transition," MPRA Paper 61803, University Library of Munich, Germany.
    11. Jesus Felipe & Utsav Kumar & Arnelyn Abdon, 2014. "As You Sow So Shall You Reap: From Capabilities to Opportunities," Oxford Development Studies, Taylor & Francis Journals, vol. 42(4), pages 488-515, December.
    12. Qyyum, Muhammad Abdul & Ali Shah, Syed Fahad & Qadeer, Kinza & Naquash, Ahmad & Yasin, Muhammad & Rehan, Mohammad & Tabatabaei, Meisam & Aghbashlo, Mortaza & Lee, Moonyong & Nizami, Abdul-Sattar, 2022. "Biowaste to bioenergy options for sustainable economic growth opportunities in developing countries: Product space model analysis and policy map development," Renewable and Sustainable Energy Reviews, Elsevier, vol. 169(C).
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    14. Ali Shah, Syed Fahad & Qyyum, Muhammad Abdul & Qadeer, Kinza & Lee, Moonyong, 2021. "Sustainable economic growth and export diversification potential for Asian LNG-exporting countries: LNG–petrochemical nexus development using product space model," Energy, Elsevier, vol. 236(C).

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    More about this item

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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