Labor Market Assessment Tools: Product Space Analysis

Product space depicts a network map in which products are closer to one another if growth in their exports is correlated, while economic complexity is “a measure of the knowledge in a society that gets translated into the products it makes.” When countries become more economically complex by upgrading or moving to more sophisticated products, economic growth and progress can occur, and the more closely related the products are to what the country is already producing, the easier this process is. Having a map of economic complexity at the national level enables policymakers and implementers to look at the current export basket of a particular country and identify the products which, if it diversified into them, would send the country onto its optimal path of greater economic complexity and therefore GDP growth. They can then create programs to diversify industries to capitalize on potential linkages, and/or invest in already heavily-linked sectors. 

 


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