1. The Product Space and Its Consequences for Economic Development Cesar A. Hidalgo Center for Complex Network Research, Department of Physics, University of Notre Dame

2. Area of countries proportional to GDP. Source: worldmapper.org

3. GDP per capita Labor, Land, Capital, Technological Sophistication Production Function Robinson, J. (1953) The production function and the theory of capital, Review of Economic Studies, vol XXI, 1953, pp. 81-106 Technical Change and the Aggregate Production Function RM Solow - The Review of Economics and Statistics, 1957

6. Share of the i th product on the basket of country c at time t Share of the i th product on the basket of the world at time t ij =P(RCA i |RCA j ) ij = min{ P(RCA i |RCA j ),P(RCA j |RCA i ) } B. Balassa, The Review of Economics and Statistics 68, 315 (1986).

10. Simple Graph: Symmetric, Binary. Directed Graph: Non-Symmetric, Binary. Directed and Weighted Graph: Any Matrix

11. Feenstras Trade Flows (1) (1) Feenstra, R. R. Lipsey, H. Deng, A. Ma and H. Mo. 2005. World Trade Flows: 1962-2000 NBER working paper 11040. National Bureau of Economic Research, Cambridge MA. sitc-4 import and export data.

12. Threshold = 0.55 Number of Links = 1525

14. $ 44k $ 30k$ 32k $ 31k $ 32k = $ 34k $ 30k $ 8k$ 5k $ 7k = $ 12k PRODY Hausmann, Hwang and Rodrik (2006), NBER Working Paper 11905, (2006)

15. Footwear Undergarments made of Cotton Coats and Jackets Organo Sulphur Compounds Phenols Cyclic Alcohols

17. Denotes where region has RCA KEY

18. MALAYSIA

19. Malaysia 1975

20. Malaysia 1980

21. Malaysia 1985

22. Malaysia 1990

23. Malaysia 1995

24. Malaysia 2000

25. China

26. China 1975

27. China 1980

28. China 1985

29. China 1990

30. China 1995

31. China 2000

32. CHILE

33. Chile 1975

34. Chile 1980

35. Chile 1985

36. Chile 1990

37. Chile 1995

38. Chile 2000

39. Density j = Fraction of the product space that seems to be developed from the j th product perspective Discovery Factor H j = Increase in density between transition product and undeveloped products.

40. Discovery Factor Density

41. P(transition | closest developed product is at proximity )

43. Conclusion We showed: Product space is heterogeneous Constrains the development of RCA Rich and poor countries are located in distinct places of it Development Strategies should be different for rich and poor countries The structure of the space prevents economical convergence

44. http://www.nd.edu/~chidalgo http://austria.phys.nd.edu/productspace

45. Stable..? Pearsons Correlation Coefficient Between the Matrices. 1990 19981985 0.616 0.6960.7022

46. Node Size Proportional to Increase on World Trade