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Moving to the Adjacent Possible: Discovering Paths for Export Diversification in Rwanda

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  • Hausmann, Ricardo

    (Harvard University)

  • Chauvin, Jasmina

    (Harvard University)

Abstract

How can Rwanda, which currently has one of the lowest levels of income and exports per capita in the world, grow and diversify its economy in presence of significant constraints? We analyze Rwanda's historical growth and trade performance and find that Rwanda's high transportation costs and limited productive knowledge have held back greater export development and have resulted in excessive rural density. Three basic commodities--coffee, tea, and tin--made up more than 80 percent of the country's exports through its history and still drive the bulk of export growth today. Given Rwanda's high population density and associated land scarcity, these traditional exports cannot create enough jobs for its growing population, or sustainably drive future growth. Rwanda needs new, scalable activities in urban areas. In this report, we identify a strategy for greater diversification of exports in Rwanda that circumvents the key constraints and is separately tailored for regional and global export destinations. Our results identify more than 100 tradable products that lie at Rwanda's knowledge frontier, are not intensive in Rwanda's scarce resources, and economize on transportation costs. Our analysis produces a vision of a more diversified Rwanda, which can be used as a guide for investment promotion decisions. We illustrate an approach that can be applied to other settings in order to identify opportunities for export diversification that take seriously local constraints and external market opportunities.

Suggested Citation

  • Hausmann, Ricardo & Chauvin, Jasmina, 2015. "Moving to the Adjacent Possible: Discovering Paths for Export Diversification in Rwanda," Working Paper Series rwp15-022, Harvard University, John F. Kennedy School of Government.
    • Handle: RePEc:ecl:harjfk:rwp15-022
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    References listed on IDEAS

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    1. Ricardo Hausmann & Bailey Klinger, 2008. "South Africa's export predicament," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 609-637, October.
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    4. Ricardo Hausmann & Bailey Klinger, 2008. "Growth Diagnostics: Perú," Research Department Publications 2005, Inter-American Development Bank, Research Department.
    5. Ricardo Hausmann & Bailey Klinger, 2008. "Growth Diagnostics: Perú," Research Department Publications 2005, Inter-American Development Bank, Research Department.
    6. Ricardo Hausmann & César Hidalgo, 2011. "The network structure of economic output," Journal of Economic Growth, Springer, vol. 16(4), pages 309-342, December.
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    Cited by:

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    2. Romero, João P. & Gramkow, Camila, 2021. "Economic complexity and greenhouse gas emissions," World Development, Elsevier, vol. 139(C).
    3. Caitlin Allen Whitehead & Haroon Bhorat, 2021. "Understanding Economic Complexity: An Application to the MER Sector," Working Papers 202105, University of Cape Town, Development Policy Research Unit.
    4. John Spray & Sebastian Wolf, 2017. "Industries without smokestacks in Uganda and Rwanda," WIDER Working Paper Series 012, World Institute for Development Economic Research (UNU-WIDER).
    5. Antonella Chiappelo & Alejandro Danón & Guillermina Marto & Nicolás Pinto, 2019. "Tell me what you export today and I will tell you what you will export tomorrow: The Product Space and the Evolution of Country pattern of specialization," Asociación Argentina de Economía Política: Working Papers 4171, Asociación Argentina de Economía Política.
    6. John Spray & Sebastian Wolf, 2017. "Industries without smokestacks in Uganda and Rwanda," WIDER Working Paper Series wp-2017-12, World Institute for Development Economic Research (UNU-WIDER).
    7. Manaseh O. Oiro & Bernadette Wanjala & Rose Ngugi & Diana Lukalo Naudé, 2019. "An Export-led Growth for Kenya: Where is the niche?," Working Papers idrcdprukenya, University of Cape Town, Development Policy Research Unit.
    8. Hepburn, Cameron & Mealy, Penny, 2017. "Transformational Change: Parallels for addressing climate and development goals," INET Oxford Working Papers 2019-02, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford, revised May 2019.
    9. Jaime de Melo, 2020. "A Dashboard for Trade Policy Diagnostics," Working Papers hal-03004368, HAL.
    10. Bjørn Bo Sørensen & Christian Estmann & Enilde Sarmento & John Rand, 2020. "Economic complexity and structural transformation: the case of Mozambique," WIDER Working Paper Series wp-2020-141, World Institute for Development Economic Research (UNU-WIDER).
    11. Haroon Bhorat & Francois Steenkamp & Caitlin Allen & Robert Hill & Christopher Rooney, 2019. "Building Economic Complexity in the South African Fibrous Plant Economy," Working Papers copwp201904, University of Cape Town, Development Policy Research Unit.
    12. Freitas, Elton & Queiroz, Arthur Ribeiro & Romero, João Prates, 2023. "Economic complexity and employment in Brazilian states," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    13. Wai Kit Si Tou, 2021. "Enhancing export competitiveness by deeper integration: The case of the East African Community," Development Policy Review, Overseas Development Institute, vol. 39(3), pages 493-507, May.
    14. João P. Romero & Fabrício Silveira & Elton Freitas, 2022. "Mission healthcare: using economic complexity to devise mission-oriented diversification strategies for Brazil," Textos para Discussão Cedeplar-UFMG 639, Cedeplar, Universidade Federal de Minas Gerais.
    15. Ahmadou Aly Mbaye & Stephen Golub & Anastasia Vasilyeva, 2019. "Senegal’s International Competitiveness and Employment Creation for Women and Youth. The Product Space Analysis and Fieldwork Findings," Working Papers idrcdprusenegal, University of Cape Town, Development Policy Research Unit.
    16. Christian Estmann & Bjørn Bo Sørensen & Benno Ndulu & John Rand, 2022. "Merchandise export diversification strategy for Tanzania: Promoting inclusive growth, economic complexity and structural change," The World Economy, Wiley Blackwell, vol. 45(8), pages 2649-2695, August.
    17. William Baah-Boateng & Eric Twum, 2019. "Economic Complexity and Employment for Women and Youth: The Case of Ghana," Working Papers idrcdprughana, University of Cape Town, Development Policy Research Unit.

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