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Diop, López-Cálix, and Walkenhorst
total exports and nonfuel exports. In contrast, resource-poor, laborabundant countries are significantly more diversified in their exports and have been able to broaden their export portfolio since the 1980s. Econometric analysis suggests that this increased diversification is driven by foreign investments in nontraditional export products, which gained importance in the overall portfolio over time. In contrast, the diversification that occurred in resource-rich countries was often driven by foreign investors developing new, nontraditional product lines for export. This diversification was more modest and often insignificant. Chapter 3, by Nassif, investigates the emergence of new export products by drawing on the findings of a set of country case studies. The author analyzes 23 successful cases in the Arab Republic of Egypt, Jordan, Lebanon, Morocco, and Tunisia to assess the factors that trigger or constrain the discovery of new exports at the firm level. Although several factors were found to play a role, the most important element in the discovery process turned out to be a combination of information about new business opportunities and a willingness to take risks and adopt new technologies and management techniques. Conversely, the high cost of gathering important information and the resulting uncertainty were reported to be major obstacles to initiating a new export activity. First movers were not concerned about competition from domestic followers. In fact, they often facilitated and even encouraged imitation through knowledge sharing and collaboration to achieve essential economies of scale in branding and marketing. Producer clusters and the degree of similarity of skills and tasks in different export activities are also at the core of the analysis of Hausmann, Klinger, and López-Cálix in their assessment of export diversification in Algeria, in chapter 4. Drawing on a new methodological approach, the authors identify a list of products that could serve as targets for industrial development, based on the tradeoffs among several factors: whether the new product requires capabilities similar to those used to produce existing products, so that switching to the new product is relatively easy (“proximity”); whether the new product increases the level of technology of the export basket, a key determinant of growth (“sophistication”); and whether the new product facilitates the export of additional new products, because they require capabilities similar to those used to produce the new product (“strategic value”). This analysis generates a list of products that would be the most efficient targets of industrial policy. Agroindustry, aluminum smelting, and steel and metal works are found to have high potential and substantial strategic value. This perspective also