New paper by Dani Rodrik

Looking at structural change and its causes in international trade. Here is his post and here is his paper.

My first look is that this is more evidence of the Hidalgo-Hausmann effect.  He finds that countries which depend on commodity exports require more structural change during adaption than countries with variable product space.

The chart makes clear that the bulk of the difference in economic performance since 1990 between Asia, on the one hand, and Latin America and Africa, on the other, is accounted for by differences in patterns of structural change. Asian countries have, on average, experienced growth-enhancing structural change; not so the others.

Technology advancements favor the nations that already have complex product space, and get the hyperbolic growth. In channel theory, growth goes expands with the number of channel components, a Nlog(N) effect.

This is bad news for Latin America and Africa. This also implies future problems for nations that have channels dominated by inflexible entitlement systems.