Visualizing Product Spaces
Here is a fascinating visualization of the products exported by various countries, which may help explain why some nations are rich and others are poor.
“The … map shows each economy in this network of products, by highlighting the products each country exported. Over time, economies move across the product map as their export mix changes. Rich countries have larger, more diversified economies, and so produce lots of products–especially products close to the densely connected heart of the network. East Asian economies look very different, with a big cluster around textiles and another around electronics manufacturing, and–contrary to the hype–not much activity in the products produced by rich countries. African countries tend to produce a few products with no great similarity to any others.” That could be a big problem. The network maps show that economies tend to develop through closely related products. A country such as Colombia makes products that are well connected on the network, and so there are plenty of opportunities for private firms to move in to, provided other parts of the business climate allow it. But many of South Africa’s current exports–diamonds, for example–are not very similar to anything. If the country is to develop new products, it will mean making a big leap. The data show that such leaps are unusual.(HT: Marginal Revolution).
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