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Lebanon’s Manufacturing Sector: Inaction and Untapped Potential

This policy report on Lebanon’s industrial sector is the first in 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 Lebanon’s product space reveals that the country should focus on facilitating the development of new complex products, particularly in the machinery-electrical clusters and the chemical community. These products are attractive in terms of their tradeoff between distance and complexity and their potential strategic value in improving the position of the country. To meet this goal, Lebanon should focus on providing support and public inputs to existing industries with the aim of improving their productivity and ability to jump to nearby opportunities.

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