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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

Antonella Chiappelo, Alejandro Danón, Guillermina Marto and Nicolás Pinto

No 4171, Working Papers from Asociación Argentina de Economía Política

Abstract: Countries pattern of specialization and its evolution has been economic area of notable interest by academy and policy makers. Moreover, many authors show that economies grow by improving the number and complexity of the products that they produce. Hidalgo, Klinger, Barabasi and Hausmann (2007) constructed the Product Space, a network that maps the connection, between every product worldwide traded, in order to explain the evolution of countries pattern of specialization. However, this matrix estimates a conditional probability of exporting products using a symmetrical approach, that tends to punish more tradable products. In order to improve the predictions of the evolution of country productive structure, we propose an asymmetrical measure, assuming that the conditional probability of exporting a product P given P ́ is exported is not the same as the reverse. Consequently, this new measure predicts nearly 40% of the developed products and more than 70% of the declined products.

Keywords: Product Space; Economic Development; Trade (search for similar items in EconPapers)
JEL-codes: O1 O2 F1 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2019-11
New Economics Papers: this item is included in nep-int
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