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The Product Space Revisited: China's Trade Profile

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  • Benno Ferrarini
  • Pasquale Scaramozzino

Abstract

The concept of product space has encountered broad interest within the development community, as an analytical tool against which to assess countries’ potential to diversify their production and export structures. It has received far less attention in the economics literature, and its assumptions and building blocks have not been put under scrutiny. This paper assesses whether exclusive reliance on export data in product space analysis may limit its value as a tool assessing country capabilities. Reliance on net trade flows—to account for horizontal intra‐industry trade—and on unit values—to capture within‐product differentiation—changes the features of the product space. Based on a highly detailed data set of both trade value and volume and spanning over 144 countries, the amended product space put forth in this paper shows that China has indeed expanded its trade profile to now occupy also product areas that are typically associated with higher‐income countries. However, China's remarkable success in expanding horizontally within the product space is strongly qualified by the introduction of the vertical dimension, which shows the country to be occupying mostly the low‐unit value segment of product categories, more akin to the typical trade profile of a developing country.

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  • Benno Ferrarini & Pasquale Scaramozzino, 2015. "The Product Space Revisited: China's Trade Profile," The World Economy, Wiley Blackwell, vol. 38(9), pages 1368-1386, September.
    • Handle: RePEc:bla:worlde:v:38:y:2015:i:9:p:1368-1386
    DOI: 10.1111/twec.12246
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    3. Ferrarini, Benno & Scaramozzino, Pasquale, 2016. "Production complexity, adaptability and economic growth," Structural Change and Economic Dynamics, Elsevier, vol. 37(C), pages 52-61.
    4. Eum, Wonsub & Lee, Jeong-Dong, 2019. "Role of production in fostering innovation," Technovation, Elsevier, vol. 84, pages 1-10.
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    6. Cinquetti, Carlos & Nunes De Faria, Rosane, 2016. "Direction, Extension and Price of Exports’ Quality," Conference papers 332801, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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