manufacturing base that capitalizes on linkages emanating from agribusinesses, the real estate sector, and tourism for example, would deserve priority.

An analysis of the product space,<sup>84</sup> of the changing composition, complexity and quality of exports, and an analysis of agricultural, tourism and petrochemicals (for Uganda) value chains<sup>85</sup> can offer some qualified guidance<sup>86</sup> as to activities that Rwanda et al could enter and that the respective governments might support. One tool that is frequently employed is the Hausmann-Hidalgo technique<sup>87</sup> (including measures of export complexity) and show with the help of industrial and employment census data on entry of firms and enterprise surveys the subsectors where economic activity is intensifying.<sup>88</sup> Rwandan manufactured products with the highest revealed comparative advantage are mainly ones made of paper, but they also include iron and steel containers and material for cleaning shoes and clothing. Similar calculations for Uganda identify leather products and products made with iron or steel plus detergents.

The Hausmann-Hidalgo product space analysis for Rwanda, shows not surprisingly that resource products have the most potential e.g. processed agricultural products but also specialized textiles, construction materials plus items such as fans, gas pumps, metal working machinery tools, and nickel alloys. Most of these products are also appropriate for Uganda although Balchin et al include uranium concentrates, sesame seeds, cocoa waste, leather, and parts for machinery (Balchin et al 2016).

In their analysis of Rwanda, Hausmann and Chauvin (2015) include many agricultural and other more complex products such as: “coffee extracts, sugars, syrups, and fermented beverages, various vegetable oils, preserved fruits and jellies, concentrated and preserved milk and cheese products, live poultry and eggs, preserved meats, as well as herbicides, pesticides, and fertilizers. The 30 frontier products in this category account for more than US$ 145 billion of world trade and

> 84 Hidalgo et al (2007) https://arxiv.org/pdf/0708.2090.pdf; A description of the H-H technique and its application to SSA can be found in Abdon and Felipe (2011) <u>http://www.levyinstitute.org/pubs/wp_670.pdf</u>

> 85 IMF (2016) https://www.imf.org/external/pubs/ft/dp/2016/afr1602.pdf; UNIDO (2015) <u>http://www.unido.org//fileadmin/user_media/Services/PSD/WP_2015_04_v2.pdf; Foster-McGregor</u> et al (2015) http://www.merit.unu.edu/publications/working-papers/abstract/?id=5759; Conde et al (2015) http://www3.weforum.org/docs/WEF_ACR_2015/ACR_Chapter2.3_2015.pdf; Christian et al (2011) http://www.cggc.duke.edu/pdfs/2011-11-11_CGGC_Tourism-Global-Value-Chain.pdf; Agribusiness value chains http://www.cggc.duke.edu/gvc/project.php?proj=175; - - - <u>http://www.hydrocarbonprocessing.com/magazine/2016/april 2016/special report petrochemical-developments/petrochemical-value-chain-analysis-reveals-downstreamopportunities-for-qatar</u>

86 For reasons explained towards the end of this section.

87 A study of Rwanda’s export prospects by Hausmann and Chauvin (2015) identified 100 products that “lie at Rwanda’s knowledge frontier, are not intensive in Rwanda’s scarce resource and economize on transportation costs”. <u>http://growthlab.cid.harvard.edu/files/growthlab/files/hausmann_chauvin_rwanda_294.pdf</u> 88 Industrial census data are another source of information on entry and growth of manufacturing activity. Bloom et al (2013) provide some data on firms in Uganda; Gathani and Stoelinga (2013 on Rwanda. http://www.ucl.ac.uk/~uctpimr/research/IGC%20Evidence%20Paper%20<u>%20Firms%20131231%20Final.pdf</u> 27