Why did some countries catch-up, while others got stuck in the middle? Stages of productive sophistication and smart industrial policies

Dominik Hartmann, Ligia Zagato, Paulo Gala and Flavio L. Pinheiro

Structural Change and Economic Dynamics, 2021, vol. 58, issue C, 1-13

Abstract: Development studies on the middle-income trap have highlighted the challenges for developing economies to transform their productive systems from simple towards high value-added activities. Here, we use trade data of 116 countries to quantify the stages of productive sophistication and reveal the critical phase that countries encounter at intermediate levels of economic sophistication. Our results reveal that only five countries (i.e. Ireland, Israel, Hungary, Singapore, and South Korea) overcame the gravitation towards simple products and fully transformed their economies towards complex products between 1970 and 2010. They successfully made use of windows of opportunities in the digital and electronics sectors through smart industrial policies that promoted endogenous skills and access to international knowledge sources. In contrast, countries like Brazil or South Africa still struggle with the gravitation towards simple economic activities, social fragmentation, and a lack of coherent industrial policies.

Keywords: Catching-up; Economic complexity; Economic growth; Industrial policies; Product space; Productive sophistication (search for similar items in EconPapers)
JEL-codes: B20 D85 E02 F10 O25 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0954349X21000412
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Why did some countries catch-up, while others got stuck in the middle? Stages of productive sophistication and smart industrial policies (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:58:y:2021:i:c:p:1-13

DOI: 10.1016/j.strueco.2021.04.007

Access Statistics for this article

Structural Change and Economic Dynamics is currently edited by F. Duchin, H. Hagemann, M. Landesmann, R. Scazzieri, A. Steenge and B. Verspagen

More articles in Structural Change and Economic Dynamics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().