How to jump further and catch up? Path-breaking in an uneven industry space

Recent studies have argued that regional diversification emerges as a path-dependent process. Developed countries that industrialize do so first from core areas in an uneven industry space and have more opportunities to jump to new related industries and sustain economic growth than do developing countries that jump from peripheral areas. Can developing countries/regions jump further to break these path-dependent trajectories? Based on China’s export data, we show that regions can make such a jump by investing in extra-regional linkages and internal innovation. The effects of these two sets of variables vary across regions and industries.