It requires investment in capital to move up the value chain; research and development; functional financial markets; and a state capable of playing a coordinating role to address market failures to assist the progress of an economy into higher value added goods and services.
Rodrik further argues that while fundamental capabilities are important, countries can achieve structural transformation in a relatively short period of time even without strong fundamental capabilities. China is a good example of structural economic change without a number of the elements that we often associate with fundamental capabilities.