IDEAS home Printed from https://ideas.repec.org/p/cid/wpfacu/146.html
   My bibliography  Save this paper

The Structure of the Product Space and the Evolution of Comparative Advantage

Author

Listed:
  • Ricardo Hausmann

    (Harvard's Growth Lab)

  • Bailey Klinger

Abstract

This paper establishes a robust stylized fact: changes in the revealed comparative advantage of nations are governed by the pattern of relatedness of products at the global level. As countries change their export mix, there is a strong tendency to move towards related goods rather than to goods that are farther away. The pattern of relatedness of products is only very partially explained by similarity in broad factor or technological intensities, suggesting that the relevant determinants are much more product-specific. Moreover, the pattern of relatedness of products exhibits very strong heterogeneity: there are parts of this ‘product space’ that are dense while others are sparse. This implies that countries that are specialized in a dense part of the product space have an easier time at changing their revealed comparative advantage than countries that are specialized in more disconnected products.

Suggested Citation

  • Ricardo Hausmann & Bailey Klinger, 2007. "The Structure of the Product Space and the Evolution of Comparative Advantage," CID Working Papers 146, Center for International Development at Harvard University.
    • Handle: RePEc:cid:wpfacu:146
    as

    Download full text from publisher

    File URL: https://www.hks.harvard.edu/sites/default/files/centers/cid/files/publications/faculty-working-papers/146.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Segerstrom, Paul S, 1991. "Innovation, Imitation, and Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 807-827, August.
    2. Kiminori Matsuyama, 1991. "Increasing Returns, Industrialization, and Indeterminacy of Equilibrium," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 617-650.
    3. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    4. Jovanovic, Boyan & Nyarko, Yaw, 1996. "Learning by Doing and the Choice of Technology," Econometrica, Econometric Society, vol. 64(6), pages 1299-1310, November.
    5. Jaffe, Adam B, 1986. "Technological Opportunity and Spillovers of R&D: Evidence from Firms' Patents, Profits, and Market Value," American Economic Review, American Economic Association, vol. 76(5), pages 984-1001, December.
    6. Grossman, Gene M & Helpman, Elhanan, 1989. "Product Development and International Trade," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1261-1283, December.
    7. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(1), pages 43-61.
    8. Peter K. Schott, 2004. "Across-Product Versus Within-Product Specialization in International Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(2), pages 647-678.
    9. Ricardo J. Caballero & Adam B. Jaffe, 1993. "How High Are the Giants' Shoulders: An Empirical Assessment of Knowledge Spillovers and Creative Destruction in a Model of Economic Growth," NBER Chapters, in: NBER Macroeconomics Annual 1993, Volume 8, pages 15-86, National Bureau of Economic Research, Inc.
    10. Edward P. Lazear, 2009. "Firm-Specific Human Capital: A Skill-Weights Approach," Journal of Political Economy, University of Chicago Press, vol. 117(5), pages 914-940, October.
    11. Hausmann, Ricardo & Rodrik, Dani, 2003. "Economic development as self-discovery," Journal of Development Economics, Elsevier, vol. 72(2), pages 603-633, December.
    12. Sanjaya Lall, 2000. "The Technological Structure and Performance of Developing Country Manufactured Exports, 1985-98," Oxford Development Studies, Taylor & Francis Journals, vol. 28(3), pages 337-369.
    13. Leamer, Edward E, 1987. "Paths of Development in the Three-Factor, n-Good General Equilibrium Model," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 961-999, October.
    14. Balassa, Bela, 1986. "Comparative Advantage in Manufactured Goods: A Reappraisal," The Review of Economics and Statistics, MIT Press, vol. 68(2), pages 315-319, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Guerson, Alejandro & Parks, James & Torrado, Monica Parra, 2007. "Export structure and growth : a detailed analysis for Argentina," Policy Research Working Paper Series 4237, The World Bank.
    3. Badibanga, Thaddee Mutumba & Diao, Xinshen & Roe, Terry L. & Somwaru, Agapi, 2008. "Dynamics of Structural Transformation: Understanding the Key Factors That Drive Innovative Activities in Selected Asian and African Countries," Bulletins 43890, University of Minnesota, Economic Development Center.
    4. Guzmán Ourens, 2012. "Can the Method of Re?ections help predict future growth?," Documentos de Trabajo (working papers) 1712, Department of Economics - dECON.
    5. Smolny, Werner, 1997. "Endogenous innovations in a model of the firm: Theory and empirical application for West-German manufacturing firms," Discussion Papers 39, University of Konstanz, Center for International Labor Economics (CILE).
    6. Jeremy C. Stein, 1994. "Waves of Creative Destruction: Customer Bases and the Dynamics of Innovation," NBER Working Papers 4782, National Bureau of Economic Research, Inc.
    7. Badibanga, Thaddee & Diao, Xinshen & Roe, Terry & Somwaru, Agapi, 2009. "Dynamics of structural transformation: An empirical characterization in the case of China, Malaysia, and Ghana," IFPRI discussion papers 856, International Food Policy Research Institute (IFPRI).
    8. Blackburn, Keith & Hung, Victor T. Y. & Pozzolo, Alberto F., 2000. "Research, Development and Human Capital Accumulation," Journal of Macroeconomics, Elsevier, vol. 22(2), pages 189-206, April.
    9. Robert Z. Lawrence & Lawrence Edward, 2010. "Do Developed and Developing Countries Compete Head to Head in High Tech?," Working Paper Series WP10-8, Peterson Institute for International Economics.
    10. Richard E. Baldwin & Philippe Martin & Gianmarco I. P. Ottaviano, 2021. "Global Income Divergence, Trade, and Industrialization: The Geography of Growth Take-Offs," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 2, pages 25-57, World Scientific Publishing Co. Pte. Ltd..
    11. Adam Jaffe & Manuel Trajtenberg, 1999. "International Knowledge Flows: Evidence From Patent Citations," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 8(1-2), pages 105-136.
    12. Rachel Griffith & Stephen Redding & John Van Reenen, 2004. "Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 883-895, November.
    13. Per Botolf Maurseth, 2005. "Lovely but dangerous: The impact of patent citations on patent renewal," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(5), pages 351-374.
    14. Pegkas, Panagiotis & Staikouras, Christos & Tsamadias, Constantinos, 2019. "Does research and development expenditure impact innovation? Evidence from the European Union countries," Journal of Policy Modeling, Elsevier, vol. 41(5), pages 1005-1025.
    15. Alberto Franco Pozzolo, 2004. "Research and Development, Regional Spillovers and the Location of Economic Activities," Manchester School, University of Manchester, vol. 72(4), pages 463-482, July.
    16. Segerstrom, Paul S, 2000. "The Long-Run Growth Effects of R&D Subsidies," Journal of Economic Growth, Springer, vol. 5(3), pages 277-305, September.
    17. Colantone, Italo & Crinò, Rosario, 2014. "New imported inputs, new domestic products," Journal of International Economics, Elsevier, vol. 92(1), pages 147-165.
    18. Boiscuvier, Éléonore, 2001. "Innovation, intégration et développement régional," L'Actualité Economique, Société Canadienne de Science Economique, vol. 77(2), pages 255-280, juin.
    19. Gianluca Benigno & Luca Fornaro, 2018. "Stagnation Traps," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(3), pages 1425-1470.
    20. Keiichi Kishi, 2015. "Dynamic analysis of wage inequality and creative destruction," Journal of Economics, Springer, vol. 115(1), pages 1-23, May.

    More about this item

    Keywords

    Structural Transformation; Discovery; Technological Change;
    All these keywords.

    JEL classification:

    • F19 - International Economics - - Trade - - - Other
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cid:wpfacu:146. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chuck McKenney (email available below). General contact details of provider: https://edirc.repec.org/data/ciharus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.