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This paper approaches inclusive development in South and South-West Asia through the framework of structural transformation and productive capacities. It discusses the opportunities for these countries to build their productive capacities through product diversification and presents a list of potential new products and export markets that could be targeted by government and private sector for achieving higher long-term gains. The paper also discusses country-specific strategies that combine laissez-faire and strategic diversification approaches to facilitate the emergence of new economic activities that are more likely to increase the productive capacities in the country.

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