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Discovering East Africa's Industrial Opportunities

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  • Cesar A. Hidalgo

Abstract

What are East Africa's industrial opportunities? In this article we explore this question by using the Product Space to study the productive structure of five south-east African countries: Kenya, Mozambique, Rwanda, Tanzania and Zambia. The Product Space is a network connecting products that tend to be exported by the same sets of countries. Since countries are more likely to develop products that are close by in the Product Space to the ones that they already produce, the Product Space can be used to help anticipate a country's industrial opportunities. Our results suggest that the most natural avenue for future product diversification for these five south-east African nations resides in the agricultural sector, since all of these nations appear to have productive structures that are pre-adapted to the production of many agricultural products that none of them are currently exporting. We conclude this paper by exploring the potential benefits of further regional economic integration by doing an exercise in which we pull together the productive structures of these five countries. This exercise shows that the products that become more accessible in the combined economy are once again predominantly agricultural. These results suggest that while diversification into all sectors should remain an important long-term goal of the region, the path towards increased diversification in the near future may well lie in a more empowered and diverse agricultural sector.

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Paper provided by arXiv.org in its series Papers with number 1203.0163.

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Date of creation: Mar 2012
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Handle: RePEc:arx:papers:1203.0163

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Web page: http://arxiv.org/

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  1. Frank Neffke & Martin Henning & Ron Boschma, 2011. "How Do Regions Diversify over Time? Industry Relatedness and the Development of New Growth Paths in Regions," Economic Geography, Clark University, vol. 87(3), pages 237-265, 07.
  2. Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
  3. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
  4. Philippe Aghion & Peter Howitt, 2009. "The Economics of Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012634, January.
  5. Hausmann, Ricardo & Klinger, Bailey, 2006. "Structural Transformation and Patterns of Comparative Advantage in the Product Space," Working Paper Series rwp06-041, Harvard University, John F. Kennedy School of Government.
  6. Hausmann, Ricardo & Klinger, Bailey & Lawrence, Robert Z., 2008. "Examining Beneficiation," Working Paper Series rwp08-030, Harvard University, John F. Kennedy School of Government.
  7. Hausmann, Ricardo & Rodrik, Dani, 2003. "Economic development as self-discovery," Journal of Development Economics, Elsevier, vol. 72(2), pages 603-633, December.
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