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Small Island Developing States (SIDs) face unique obstacles in economic growth due to geographic isolation, limited domestic market demand and insufficient infrastructure. By applying the Growth Identification and Facilitation Framework (GIFF) to the case of Timor-Leste, this paper aims to identify untapped growth potentials and provide policy recommendations for structural economic transformation. Building on literature review and comparative analysis with existing data, this paper pinpoints the latent comparative advantages and indicates the key constraints to industrialization. Based on a factor endowment analysis, the paper suggests that Timor-Leste should focus on light manufacturing sector with the support of increased revenue from natural resources projects such as hydropower plants. The authors argue that Timor-Leste should seek industrial transfer opportunities from China in light manufactured goods. To address the detected limitations, the paper recommends a shift in public expenditure to building industrial parks and transportation infrastructure, as well as making use of external funding to kickstart industrialization and facilitate structural transformation.