relatively higher productivity goods already being exported or by exporting new high productivity goods) then, according to HHR, one could expect an increase in future economic growth.

In addition, we compute indicators (“distance” in HHR terminology) which measure the likelihood that new export products emerge. We apply the HHR analysis to Argentina and, for each product in the Argentine export basket, we measure the likelihood that new export products will appear given the density of the product space in which they are located. Thereby, we can identify goods currently exported by Argentina that can potentially develop into new products. Finally, in the last section we include an econometric analysis using cross country data aiming at testing the possible effect of export income on economic growth.

A detailed analysis of the structure of exports (4-digit, 1241 products) points to the following general conclusions:

- Exports in Argentina are highly concentrated. In 2004, the top ten products accounted for 57 percent of total exports and the top twenty accounted for 72 percent. Concentration has been increasing in recent years.

- As of 2004, the income content of Argentine exports was roughly the same as per capita GDP in PPP terms. According to the HHR analysis, this might suggest low expectations about future growth.

- However, the trend in the period 1994-2004 shows an improvement in growth prospects as can be inferred from the relation between the income content of exports and GDP per capita.

- Argentine exports include several high income industrial products, especially in such product groups as motor vehicles, chemicals, metals and pipes. However, high income exports are not limited to industrial products. They also include less-processed products and also primary products such as wheat, malt extract, frozen and filleted fish, and diary products, among others.

- About half of the “new” export products, that is, products that have shown the highest growth in export value in 2004 compared to the average level in 1994-1999, have a high income rating. Most of these high-income “new” products are complex industrial manufactured goods. However, the “new” products still represent a minor proportion of total exports.  The 50 products with the highest growth rate in 2004 relative to the average of 1994-1999 represent only 1.2 percent of total exports.

- On average, the chances of developing new export products (measured by distance) improved slightly from 1994-2004.   A decreasing trend during the first part of the period gave way to an increasing trend since 2000.

- Moreover, the average “distance” has been reduced for both high and low income export products (defined as upscale and downscale products respectively in HHR) through the 1994-2004 period.

- On the other hand, the average product income (ranked by the total value of the product exported) for upscale products has increased while that for the downscale products has decreased.  Hence the range of ranked product income was wider in 2004 compared to 1994. In other words, there are more upscale goods with higher product income but also more downscale goods with lower product income.

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