The Product Space: What Does it Say About the Opportunities for Growth and Structural Transformation of Sub-Saharan Africa?

Levy Economics Institute Working Papers No. 670

35 Pages Posted: 23 May 2011

See all articles by Arnelyn Abdon

Arnelyn Abdon

Asian Development Bank

Jesus Felipe

Asian Development Bank

Date Written: May 19, 2011

Abstract

In this paper we look at the economic development of Sub-Saharan Africa (SSA) in the context of structural transformation. We use Hidalgo et al.’s (2007) concept of product space to show the evolution of the region’s productive structure, and discuss the opportunities for growth and diversification. The majority of SSA countries are trapped in the export of unsophisticated, highly standard products that are poorly connected in the product space; this makes the process of structural transformation of the region particularly difficult. The products that are nearby to those they already export have the same characteristics. Therefore, shifting to these products will do little to improve SSA’s growth prospects. To jump-start and sustain growth, governments must implement policies and provide public inputs that will encourage the private sector to invest in new and more sophisticated activities.

Keywords: Industrial Policy, Product Space, Structural Transformation, Sub-Saharan Africa

JEL Classification: O14, O25, O55

Suggested Citation

Abdon, Arnelyn May and Felipe, Jesus, The Product Space: What Does it Say About the Opportunities for Growth and Structural Transformation of Sub-Saharan Africa? (May 19, 2011). Levy Economics Institute Working Papers No. 670 , Available at SSRN: https://ssrn.com/abstract=1846734 or http://dx.doi.org/10.2139/ssrn.1846734

Arnelyn May Abdon (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Jesus Felipe

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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