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July 01, 2017 | English | Sebastian Bustos and Muhammed Ali Yildirim
Yemen’s Manufacturing Sector: Few Opportunities for Expansion

This policy report on Yemen’s industrial sector is part of a series of reports aimed at identifying strategic options Arab countries have in undertaking structural transformation. Using the product space methodology, this report analyzes existing capabilities of selected economies by identifying products they currently export and determining which path they should follow to produce more sophisticated and strategic products. A study of Yemen’s product space reveals that the country’s future path for development should focus on new opportunities in the foodstuff, chemical, and mechanical/electrical clusters. As a group, the foodstuff cluster is closer in distance given the country’s productive knowledge and capabilities, but has on average, lower complexity. Yemen will require bold moves to solve market failures that prevent the country from developing competitive capacities in new industries. Industrial policy should focus on selecting a number of new industries or products at which to target public inputs.