Indonesia’s Product-Space

by Rizal K.

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Cognitive distance between products

A product requires a certain set of knowledge to make. Thus, different products reflect different set of knowledge. How different are those products in terms of knowledge deployed? Here, we quantify the cognitive distance between products, called inter-product proximity (Fig.1). High product proximity means that a pair of products deploys similar set of knowledge, while low product proximity means that they use relative different knowledge.

Proximity_2000

Figure 1 The Proximity Matrix. The matrix contains 1,241 x 1,241 products classification of four digits Harmonized System 1992. To enhance readability, we color-codes the proximity matrix. Light yellow means high proximity and dark blue indicates otherwise.

 

Product-Space

If we can measure the cognitive distance between products, we can build a product-space, a network representation of product proximity (Fig. 2). Apparently the product-space reveals a core-periphery pattern. More sophisticated products (e.g. green, orange, purple nodes) seem to populate the core, while resource-based products (e.g. red, dark brown, and yellow nodes) are located rather away of the core.

Product space_04_value

Figure 2 The Product-Space. The color of the nodes indicates the product classification. The size of the nodes shows its values in global market. The darker links reflect closer cognitive distance between products, and vice versa.

 

Regional Product-Space

Using the product space as a template, we construct regional product-space by depicting province exports onto the network. To reveal the evolutionary changes of regional industries, regional product-spaces are constructed at two points of time, i.e. year 2000 and 2012. Here we display two examples of regional product-space (Fig. 3). More regional product-spaces can be found here.

Figure 3 Province product spaces_IRSA

Figure 3 Regional Product-Space. A. West Java's Product-Space; B. Central Java's Product-Space.

 

Full paper can be accessed here.

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