Economies are nested and grow sideways, which constrains what any industry can become next. Nestedness means the industries present in the least diversified economies are also present in the most diversified, while the least common industries appear only in the most diversified places: Vietnam exports textiles and almost no semiconductors or pharmaceuticals, while the United States makes medical imaging devices and sophisticated software and also some garments. Because knowhow must be embodied in networks and learning is geographically biased, economies develop industries adjacent to those they already have. Part I's jigsaw is the right image: you need every piece to make an industry work, and transplanting one succeeds more often when the destination already holds some of the pieces. Business schools call it diversification toward related varieties, which is to say that an economy producing curtains is preadapted to tablecloths and not to toaster ovens.

Evidence 1 passage

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preadapted to producing tablecloths and not toaster ovens.[^298] This can be clearly seen through the idea of product space which is a network connecting similar products. To visually represent a product space, nodes (products) are connected by links to products that are likely to be exported by th

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