Some new views on product space and related diversification
Önder Nomaler & Bart Verspagen
#2022-011
We aim to contribute to the literature on product space and
diversification by proposing a number of extensions of the current
literature: (1) we propose that the alternative but related idea of a
country space also has empirical and theoretical appeal; (2) we argue
that the loss of comparative advantage should be an integral part of
(testing the empirical relevance of) the product space idea; (3) we
propose several new indicators for measuring relatedness in product
space; and (4) we propose a non-parametric statistical test based on
bootstrapping to test the empirical relevance of the product space idea.
Keywords: Diversification, specialization, product space, country space,
path dependence of specialization, relatedness
JEL Classification: F14, F63, O11