| Conventional [[economic development]] theory has been unable to decipher the role of various product types in a country's economic performance.<ref>A. Hirschman, ''The Strategy of Economic Development'' (Yale University Press, New Haven, CT, 1958).</ref><ref>P. Rosenstein-Rodan, ''Econ. J'' '''53''', 202 (1943).</ref><ref>K. Matsuyama, ''J. Econ. Theory'' '''58''', 317 (1992).</ref> Traditional ideals suggest that [[industrialization]] causes a “spillover” effect to new products, fostering subsequent growth. This idea, however, had not been incorporated in any formal [[economic model]]s. The two prevailing approaches explaining a country's economy focus on either the country's relative proportion of capital and other productive factors<ref>E. Heckscher, B. Ohlin, ''Heckscher-Ohlin Trade Theory,'' H. Flam, M. Flanders, Eds. (MIT Press, Cambridge, MA, 1991).</ref> or on differences in technological capabilities and what underlies them.<ref>P. Romer, ''J Polit. Econ.'' '''94''', 5 (1986).</ref> These theories fail to capture inherent commonalities among products, which undoubtedly contribute to a country's pattern of growth. The Product Space presents a novel approach to this problem, formalizing the intuitive idea that a country which [[export]]s bananas is more likely to next export mangoes than it is to export jet engines, for example. | | Conventional [[economic development]] theory has been unable to decipher the role of various product types in a country's economic performance.<ref>A. Hirschman, ''The Strategy of Economic Development'' (Yale University Press, New Haven, CT, 1958).</ref><ref>P. Rosenstein-Rodan, ''Econ. J'' '''53''', 202 (1943).</ref><ref>K. Matsuyama, ''J. Econ. Theory'' '''58''', 317 (1992).</ref> Traditional ideals suggest that [[industrialization]] causes a “spillover” effect to new products, fostering subsequent growth. This idea, however, had not been incorporated in any formal [[economic model]]s. The two prevailing approaches explaining a country's economy focus on either the country's relative proportion of capital and other productive factors<ref>E. Heckscher, B. Ohlin, ''Heckscher-Ohlin Trade Theory,'' H. Flam, M. Flanders, Eds. (MIT Press, Cambridge, MA, 1991).</ref> or on differences in technological capabilities and what underlies them.<ref>P. Romer, ''J Polit. Econ.'' '''94''', 5 (1986).</ref> These theories fail to capture inherent commonalities among products, which undoubtedly contribute to a country's pattern of growth. The Product Space presents a novel approach to this problem, formalizing the intuitive idea that a country which [[export]]s bananas is more likely to next export mangoes than it is to export jet engines, for example. |
| Conventional economic development theory has been unable to decipher the role of various product types in a country's economic performance. Traditional ideals suggest that industrialization causes a “spillover” effect to new products, fostering subsequent growth. This idea, however, had not been incorporated in any formal economic models. The two prevailing approaches explaining a country's economy focus on either the country's relative proportion of capital and other productive factors or on differences in technological capabilities and what underlies them. These theories fail to capture inherent commonalities among products, which undoubtedly contribute to a country's pattern of growth. The Product Space presents a novel approach to this problem, formalizing the intuitive idea that a country which exports bananas is more likely to next export mangoes than it is to export jet engines, for example. | | Conventional economic development theory has been unable to decipher the role of various product types in a country's economic performance. Traditional ideals suggest that industrialization causes a “spillover” effect to new products, fostering subsequent growth. This idea, however, had not been incorporated in any formal economic models. The two prevailing approaches explaining a country's economy focus on either the country's relative proportion of capital and other productive factors or on differences in technological capabilities and what underlies them. These theories fail to capture inherent commonalities among products, which undoubtedly contribute to a country's pattern of growth. The Product Space presents a novel approach to this problem, formalizing the intuitive idea that a country which exports bananas is more likely to next export mangoes than it is to export jet engines, for example. |