IV.7 The Product Space

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Cesar A. Hidalgo

Albert-László Barabási

Bailey Klinger

Ricardo Hausmann

Physicist César A. Hidalgo, international development expert Bailey Klinger, physicist Albert-László Barabási, and economist Ricardo Hausmann applied theory and methods from physics and economics to model and map the impact of “The Product Space” on the development of nations. The work is based on the assumption that (1) economies grow by upgrading the products they produce and export, and (2) the technology, capital, institutions, and skills needed to make more sophisticated products are more easily adapted from some products than from others. The map depicts co-export patterns of 775 industrial products exported by 132 countries during 1998-2000. More sophisticated products are located in a densely connected core, whereas less sophisticated products occupy a rather sparse periphery. Empirically, countries move through the product space by developing goods close to those they currently produce. Most countries can reach the core only by traversing empirically infrequent distances, which may help explain why poor countries have trouble developing more competitive exports and fail to converge to the income levels of rich countries.


References:

Hidalgo, Cesar. A., Bailey Klinger, Albert-László Barabási, and Ricardo Hausmann. 2007. "The Product Space Conditions the Development of Nations." Science 317 (5837): 482-487.

Hausmann, Ricardo, César A. Hidalgo, Sebastián Bustos, Michele Coscia, Sarah Chung, Juan Jimenez, Alexander Simoes, Muhammed A. Yıldırım. 2011 The Atlas of Economic Complexity, Puritan Press.

Hildago, Cesar A., Bailey Klinger, Albert-László Barabási, and Ricardo Hausmann. 2007. The Product Space. Courtesy of Harvard Kennedy School, Northeastern University, and University of Notre Dame. In “4th Iteration (2008): Science Maps for Economic Decision-Makers,” Places & Spaces: Mapping Science, edited by Katy Börner and Elisha F.
Hardy. http://scimaps.org

Acknowledgements: This exhibit is supported by the National Science Foundation under Grant No. IIS-0238261, CHE-0524661, IIS-0534909 and IIS-0715303, the James S. McDonnell Foundation; Thomson Reuters; the Cyberinfrastructure for Network Science Center, University Information Technology Services, and the School of Library and Information Science, all three at Indiana University. Some of the data used to generate the science maps is from the Web of Science by Thomson Reuters and Scopus by Elsevier. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of the National Science Foundation.