Location of Repository

"How Rich Countries Became Rich and Why Poor Countries Remain Poor: It's the Economic Structure . . . Duh!"

By Jesus Felipe, Utsav Kumar and Arnelyn Abdon

Abstract

Becoming a rich country requires the ability to produce and export commodities that embody certain characteristics. We classify 779 exported commodities according to two dimensions: (1) sophistication (measured by the income content of the products exported); and (2) connectivity to other products (a well-connected export basket is one that allows an easy jump to other potential exports). We identify 352 "good" products and 427 "bad" products. Based on this, we categorize 154 countries into four groups according to these two characteristics. There are 34 countries whose export basket contains a significant share of good products. We find 28 countries in a "middle product" trap. These are countries whose export baskets contain a significant share of products that are in the middle of the sophistication and connectivity spectra. We also find 17 countries that are in a "middle-low" product trap, and 75 countries that are in a difficult and precarious "low product" trap. These are countries whose export baskets contain a significant share of unsophisticated products that are poorly connected to other products. To escape this situation, these countries need to implement policies that would help them accumulate the capabilities needed to manufacture and export more sophisticated and better connected products.Bad Product; Capabilities; "Low Product" Trap; "Middle Product" Trap; Proximity; Sophistication; Structural Transformation

OAI identifier:

Suggested articles

Preview

Citations

  1. (2003). A Conclusion to Cross-National Growth Research: A Foreword ‘To the Countries Themselves’.”
  2. (1956). A Contribution to the Theory of
  3. (1956). A Theory of the Low-Level Equilibrium Trap in
  4. (1939). An Essay in Dynamic Theory.”
  5. (1946). Capital Expansion,
  6. (2003). Economic Development as Self-discovery.”
  7. (1995). Economic Growth.
  8. (1957). Economic Theory and Under-Developed Regions.
  9. (1998). Endogenous Growth Theory.
  10. (1986). Industrialization and growth: A comparative study.
  11. (2000). Industrialization under WTO Law.” Available at: www.unctad10.org/pdfs/ux_tdxrt1d7.en.pdf
  12. (2002). Kicking Away the Ladder.
  13. (2004). Mapping Fragmentation: Electronics and Automobiles
  14. (1966). Modern Economic Growth.
  15. (1988). On the Mechanics of Economic Development.”
  16. (1994). Productivity and Growth: A Disaggregated
  17. (2005). Rich Trades, Scarce Capabilities: Industrial Development Revisited.” Keynes Lecture, British Academy
  18. (2009). Sectoral Engines of Growth in Developing Asia: Stylized Facts and Implications.”
  19. (2000). Securing our future in a global economy.
  20. (1967). Strategic Factors in Economic Development.
  21. Technological Change and Industrialization in the Asian Newly Industrializing Economies: Achievements and Challenges.”
  22. (1970). The Case for Regional Policies.”
  23. (2002). The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics.
  24. (1996). The low-skill, bad-job trap.”
  25. (1993). The O-Ring Theory of Economic Development.”
  26. (2006). The Structure of the Product Space and the Evolution of Comparative Advantage.” Working Paper 128.
  27. The Technological Structure and Performance of Developing Country Manufactured Exports,
  28. (1955). The Theory of Economic Growth.
  29. (2008). Trade Liberalisation and the Poverty of Nations.
  30. (1965). Trade Liberalization and Revealed Comparative Advantage.”
  31. (2007). What you export matters.”
  32. (2010). Why has China succeeded? And Why it Will Continue to Do So.” Working Paper 611. Annandale-on-Hudson,

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.