Green product development: What does the country product space imply?

This paper contributes to green product development by identifying the green products with the highest potential for growth in a country. To address our aim, we use the concept of product proximity and product space and, borrowing from the results of recent studies on complexity economics, we advance that the green products with the highest potential for growth among all green products in a given country are those being in close proximity to the products a country produces with high Relative Comparative Advantage (RCA). We test this hypothesis performing a regression analysis. We build the product space for 141 different countries for the years between 2005 and 2013 and for each country we compute the maximum proximity of each green product to the products with high RCA (i.e., the proximity of the product source of competitive advantage closest to the green product considered). Results confirm that green products with high maximum proximity to the products with high RCA had the highest growth. So doing, we contribute to the literature by providing a new application of the product space as a policy making tool for green development. We also provide several applications of the proposed method.