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Structural Transformation Paths

We propose an algorithm that identifies paths for structural transformation. The algorithm uses information regarding similarity (distance) between traded goods and finds sequences of traded goods that describe the shortest path between current comparative advantages of a country and its industrial policy goals. In addition to this theoretical contribution, we do pilot tests of the algorithm using comparative advantages of Colombia. These tests show that paths exist, and that our algorithm is able to find paths that reduce on average 18% of the direct distance between Colombia's comparative advantages and its long-term industrial policy goals.