Transcending the geographical stickiness of complex economic activities via strategic unrelated diversification

• This study examines the characteristics of high-complexity economic activities by analyzing industry entry and maintenance at the global level. • High-complexity economic activities are geographically sticky, while low-complexity economic activities are footloose. • The geographical stickiness of complex industries is linked to their reliance on a larger number of related complex industries. • The emergence/maintenance of new, complex products relies on their relatedness to existing industrial profiles and each other. • This study confirms a mechanism for the geographical stickiness of complex economic activities and proposes strategic unrelated diversification for latecomer countries. Developing economies often face challenges in catching up and leapfrogging due to the drawbacks of industrial restructuring. This study identifies the geographical stickiness of high-complexity industries and proposes an optimal industrial diversification strategy using a thorough examination of industry entry and maintenance at the global level. The findings indicate that the mechanisms driving the geographical stickiness of complex industries are linked to their reliance on a larger number of related complex industries, as explained by the “capabilities approach”. Moreover, we encourage developing countries to strategically diversify into a small group of related and inter-dependent high-complexity industries simultaneously, a process called “strategic unrelated diversification”, thereby increasing the probability of industrial transformation. These findings have significant implications for explaining why certain countries struggle with industrial restructuring and how to facilitate industrial upgrading effectively.