Development of Product Space Theory for Systemic Analysis of Industries in Kermanshah Province

Subject Areas : Business Strategy

Shadi Ghiasi ¹ , heirsh soltanpanah ² , Adel Fatemi ³ , Abdolnaser Shojaei ⁴

1 - Department of Management, Sanandaj Branch, Islamic Azad University, Sanandaj, Iran
2 - Department of Management, Islamic Azad University, Sanandaj, Iran
3 - Department of Statistics, Sanandaj Branch, Islamic Azad University, Sanandaj, Iran
4 - Department of Economic, Sanandaj Branch, Islamic Azad University, Sanandaj, Iran

Received: 2022-07-31 Accepted : 2022-11-15 Published : 2022-12-01

Keywords: product space, regional planning, revealed and latent comparative advantage,

Abstract :

Planning for economic sections and industrial activities at a regional level requires a proper understanding of a region’s potentials. The present study applies product space theory, network science, and information on Iranian provincial production structure to outline a roadmap for industrial development of Kermanshah. Analysis of mean value added and population of Iranian provinces in 2014 to 2018 indicated that of the 32 activities examined, Kermanshah has a revealed comparative advantage in five areas (agriculture and horticulture, traditional husbandry, apiculture, sericulture, and hunting) and other agricultural areas, forestry, and chemicals, with latent comparative advantage in 11 areas, and no advantage in 16 areas. Next, greedy, majority, high degree, and low degree strategies were combined with Borda’s and Copeland’s approaches to identify 11 activities for activation prioritized as follows: poultry, fishing, food, base metal, machinery & equipment, wood industry, other non-metal minerals, pharmaceuticals, metals, appliances, and rubber and plastic products.

References:

1. Agosin, M. R. (2007). Export diversification and growth in emerging economies(Vol. 233, pp. 559-562). Working paper. DOI: 18356/27e5d46c-en


2. AKGÜNGÖR, S., & Mert, A. B. A. Y. (2021). Knowledge Space, Relatedness and Complexity: A Regional Analysis in Turkey. Yildiz Social Science Review, 7(2), 123-136. DOI: 10.51803/yssr.869824


3. Alshamsi, A., Pinheiro, F. L., & Hidalgo, C. A. (2018). Optimal diversification strategies in the networks of related products and of related research areas. Nature communications, 9(1), 1-7. DOI:https://doi.org/10.1038/s41467-018-03740-9


4. Arthur, W. A. (2017). Complexity and the economy (Translated to Persian by Mahjub), Tehran: Ney Publishing.


5. Bahar, D., Hausmann, R., & Hidalgo, C. A. (2014). Neighbors and the evolution of the comparative advantage of nations: Evidence of international knowledge diffusion?. Journal of International Economics, 92(1), 111-123. DOI: 10.1016/j.jinteco.2013.11.001


6. Bogetic, Z., Pejovic, I., & Osorio-Rodarte, I. (2013). Expanding and diversifying Montenegro's exports: A product space analysis. Available at SSRN 2288087. RePEc:cbk:journl:v:2:y:2013:i:2:p:19-34


7. Chenery, H. B., & Elkington, H. (1979). Structural change and development policy. Baltimore, MD, USA: Johns Hopkins University Press.


8. Ricardo, David, 1772-1823. (1911). The principles of political economy & taxation. London : New York :J.M. Dent; E.P. Dutton,


9. Dunning, T. (2005). Resource dependence, economic performance, and political stability. Journal of conflict resolution, 49(4), 451-482. org/10.1177/0022002705277521


10. European Commission. (2020b). Smart Specialization:
    Strengthening Innovation in Europe’s Regions. Factsheet,
    Smart Specialization Platform, Regional and Urban Policy. https://ec.europa.eu/regional_policy/sources/docgener/guides/smart_spec/strength_innov_regions_en.pdf


11. Falahati, A., Ahmadian, T. (2011). Economic Examination and Determination of Industrial Investment Priorities in Kermanshah Province.. Journal Of Economics and Regional Development, 18(2),100-125. http://dx.doi.org/10.22067/erd.v18i2.13737


12. Falahatgar, S., Chamanzamin, M. R., & Taleghani, M. (2021). The Effect of Competitive Advantage Strategies on Customer Loyalty: Mediated role of Brand Identification and Brand Awareness (Case study: Parsian Insurance customers). Journal of System Management, 7(4), 229-252. doi: 10.30495/jsm.2021.1943132.1550


13. Fortunato, P., Razo, C., & Vrolijk, K. (2015). Operationalizing the product space: A road map to export diversification(No. 219). United Nations Conference on Trade and Development. Handle: RePEc:unc:dispap:219


14. Ghosh, A. R., & Ostry, J. D. (1994). Export instability and the external balance in developing countries. Staff Papers, 41(2), 214-235. https://doi.org/10.2307/3867507


15. González, A., Ortigoza, E., Llamosas, C., Blanco, G., & Amarilla, R. (2019). Multi-criteria analysis of economic complexity transition in emerging economies: The case of Paraguay. Socio-Economic Planning Sciences, 68, 100617. DOI: 10.1016/j.seps.2018.02.004


16. Grossman, G. M., & Helpman, E. (2018). Growth, trade, and inequality. Econometrica, 86(1), 37-83. https://doi.org/10.3982/ECTA14518


17. Guevara, M. R., Hartmann, D., Aristarán, M., Mendoza, M., & Hidalgo, C. A. (2016). The research space: using career paths to predict the evolution of the research output of individuals, institutions, and nations. Scientometrics, 109(3), 1695-1709. DOI: 10.1007/s11192-016-2125-9


18. Hakala T. (2020). Export Diversification as a Contributor to Economic Growth. (Unpublished Master’s thesis). Alto University, Finland


19. Hartmann, D., Guevara, M. R., Jara-Figueroa, C., Aristarán, M., & Hidalgo, C. A. (2017). Linking economic complexity, institutions, and income inequality. World development, 93, 75-93. DOI: 1016/j.worlddev.2016.12.020


20. Hartmann, D., Bezerra, M., Lodolo, B., & Pinheiro, F. L. (2020). International trade, development traps, and the core-periphery structure of income inequality. EconomiA, 21(2), 255-278. https://doi.org/10.1016/j.econ.2019.09.001


21. Hausmann, R., & Chauvin, J. (2015). Moving to the adjacent possible: Discovering paths for export diversification in Rwanda. CID Working Paper Series. http://www.tinyurl.com/y5xbtsp7


22. Hausmann, R., Hidalgo, C. A., Bustos, S., Coscia, M., & Simoes, A. (2014). The atlas of economic complexity: Mapping paths to prosperity. Mit Press.


23. Hausmann, R., Goldstein, P., Grisanti, A., O'Brien, T., Tapia, J. A., & Santos, M. A. (2020). A roadmap for investment promotion and export diversification: The case for Jordan. CID Working Paper Series. https://growthlab.cid.harvard.edu/files/growthlab/files/2020-01-cid-wp-374-roadmap-jordan-revised.pdf


24. Hidalgo, C. A., & Hausmann, R. (2009). The building blocks of economic complexity. Proceedings of the national academy of sciences, 106(26), 10570-10575. https://doi.org/10.1073/pnas.0900943106


25. Guevara, M. R., Hartmann, D., Aristarán, M., Mendoza, M., & Hidalgo, C. A. (2016). The research space: using career paths to predict the evolution of the research output of individuals, institutions, and nations. Scientometrics, 109(3), 1695-1709. DOI: 10.1007/s11192-016-2125-9


26. Hidalgo, C. A., Klinger, B., Barabási, A. L., & Hausmann, R. (2007). The product space conditions the development of nations. Science, 317(5837), 482-487. Handle: RePEc:arx:papers:0708.2090


27. Karami, M., Rastgar, A. A., Azar, A., Feiz, D., & Esfidani, M. R. (2020). Identifying the Factors Affecting the Selection of B2B Online Market Entry Strategies Using Soft System Methodology (Case Study: IT Industry knowledge-based companies). Journal of System Management, 6(2), 55-80. doi: 10.30495/jsm.2020.677236


28. Klinger, B., & Lederman, D. (2004). Discovery and development: an empirical exploration of" new" products(Vol. 3450). World Bank Publications. https://doi.org/10.1596/1813-9450-3450


29. Lall, S. (2000). The Technological structure and performance of developing country manufactured exports, 1985‐Oxford development studies, 28(3), 337-369. DOI: 10.1080/713688318


30. Lall, S., Weiss, J., & Zhang, J. (2006). The “sophistication” of exports: A new trade measure. World development, 34(2), 222-237. https://doi.org/10.1016/j.worlddev.2005.09.002


31. Li, S., Li, X., Lang, W., Chen, H., & Huang, X. (2021). The Spatial and Mechanism Difference in the Export Evolution of Product Space in Global Countries. Sustainability, 13(4), 2255. https://doi.org/10.3390/su13042255


32. Lin, J. Y., & Monga, C. (2011). Growth identification and facilitation: the role of the state in the dynamics of structural change. World Bank policy research working paper, (5313). https://doi.org/10.1596/1813-9450-5313


33. Matsuyama, K. (1992). Agricultural productivity, comparative advantage, and economic growth. Journal of economic theory, 58(2), 317-334. https://doi.org/10.1016/0022-0531(92)90057-O


34. McMillan, M., Rodrik, D., & Verduzco-Gallo, Í. (2014). Globalization, structural change, and productivity growth, with an update on Africa. World development, 63, 11-32.https://doi.org/10.1016/j.worlddev.2013.10.012.


35. Moiseev, A.K., Bondarenko, P.A. (2020). Application of the Economic Complexity Index in Macro-Financial Models. Stud. Russ. Econ. Dev. 31, 318–326 https://doi.org/10.1134/S1075700720030120


36. Munir, Y. (2020). Influence Strategies and Social Mechanisms in Promoting Manufacturer Flexibility. Journal of System Management, 6(2), 1-25. doi: 10.30495/jsm.2020.677234


37. Neffke, F., & Henning, M. (2013). Skill relatedness and firm diversification. Strategic Management Journal, 34(3), 297-316.  https://doi.org/10.1002/smj.2014


38. Petralia, S., Balland, P. A., & Morrison, A. (2017). Climbing the ladder of technological development. Research Policy, 46(5), 956-969. DOI: 10.1016/j.respol.2017.03.012


39. Pinheiro, F. L., Alshamsi, A., Hartmann, D., Boschma, R., & Hidalgo, C. A. (2018). Shooting high or low: Do countries benefit from entering unrelated activities?. arXiv preprint arXiv:1801.05352. https://doi.org/10.48550/arXiv.1801.05352


40. Pitigala, N., & Lopez-Calix, J. (2021). Trade policy options for export diversification: The case of Mali, Chad, Niger, and Guinea. Journal of Infrastructure, Policy and Development, 4(2), 261-286. DOI: 10.24294/jipd.v4i2.1200


41. Rodrik, D. (2006). What's so special about China's exports?. China & World Economy, 14(5), 1-19. https://doi.org/10.1111/j.1749-124X.2006.00038.x


42. Santoalha, A. (2016). New Indicators of Smart Specialization: A related diversification approach applied to European Regions(No. 20161220). Centre for Technology, Innovation and Culture, University of Oslo. Handle: RePEc:tik:inowpp:20161220


43. Scott, T. J., Scott, J. T., & Link, A. N. (2017). Commercial complexity and entrepreneurial finance. Economics of Innovation and New Technology, 26(5), 489-500. https://doi.org/10.1080/10438599.2016.1236474


44. Sezai, A. (2020). Evolution of the product space and a new proposal for Turkeys export incentive system. Turkey: Presidency of Strategy and Budget. https://www.researchgate.net/publication/330089293_data-and-code-for-the-thesisrar


45. Shahmoradi, B., Samandarali Eshtehardi, M. (2018). Investigating the Status of Iran's Technological Competitiveness in the Region, Based on the Economic Complexity Approach. Journal of Science and Technology Policy, 11(1), 29-38. doi: 10.22034/jstp.2018.10.1.539421


46. Sørensen, B. B., Estmann, C., Sarmento, E. F., & Rand, J. (2020). Economic complexity and structural transformation: the case of Mozambique(No. 2020/141). WIDER Working Paper. doi:10.35188/UNU-WIDER/2020/898-6


47. Tavakoli Niya, J., Goudarzi, V., & Samadi, R. (2017). On the Analysis of the Regional Development of Markazi Province Using Multi-Criteria Techniques to Achieve Balanced Development. Journal of Studies of Human Settlements Planning, 12(2), 285-299. https://jshsp.rasht.iau.ir/article_532879.html?lang=fa


48. Wang, Y., & Turkina, E. (2020). Economic complexity, product space network and Quebec's global competitiveness. Canadian Journal of Administrative Sciences/Revue Canadienne des Sciences de l'Administration, 37(3), 334-349. https://doi.org/10.1002/cjas.1555


49. Gómez-Zaldívar, F., & Molina-Perez, E. (2021). Evolution of the Productive Capabilities of Mexico: Economic Complexity Analysis for the Development of Special Economic Zones (SEZ). The International Trade Journal, 35(1), 4-18. https://doi.org/10.1080/08853908.2020.1851328


50. Zhu, S., He, C., & Zhou, Y. (2017). How to jump further and catch up? Path-breaking in an uneven industry space. Journal of Economic Geography, 17(3), 521-545. https://doi.org/10.1093/jeg/lbw047