The Atlas of Economic Complexity

Abstract

Maps capture data expressing the economic complexity of countries from Albania to Zimbabwe, offering current economic measures and as well as a guide to achieving prosperity Why do some countries grow and others do not? The authors of The Atlas of Economic Complexity offer readers an explanation based on "Economic Complexity," a measure of a society's productive knowledge. Prosperous societies are those that have the knowledge to make a larger variety of more complex products. The Atlas of Economic Complexity attempts to measure the amount of productive knowledge countries hold and how they can move to accumulate more of it by making more complex products. Through the graphical representation of the "Product Space," the authors are able to identify each country's "adjacent possible," or potential new products, making it easier to find paths to economic diversification and growth. In addition, they argue that a country's economic complexity and its position in the product space are better predictors of economic growth than many other well-known development indicators, including measures of competitiveness, governance, finance, and schooling. Using innovative visualizations, the book locates each country in the product space, provides complexity and growth potential rankings for 128 countries, and offers individual country pages with detailed information about a country's current capabilities and its diversification options. The maps and visualizations included in the Atlas can be used to find more viable paths to greater productive knowledge and prosperity.

Economic Convergence in the EU: A Complexity Approach

“…Their main argument is that the growth path of an economy is determined by the overall complexity of a country's productive structure, and, in turn, its ability to produce and export sophisticated products requiring diverse capabilities. They validate the theory by presenting cross-country evidence that economic complexity is strongly correlated with income per capita, and that deviations from this correlation are predictive of subsequent economic growth and development (Hausmann et al 2011;Hidalgo and Hausmann 2009). This cross-country regression result revives the question of whether the relationship between complexity and growth is confirmed in the context of the European Union (EU), whose new lower-income members tend to grow faster, implying absolute beta-convergence across the Union (See Figure 1).…”

“…They confirm that their findings are valid for the 20-year period, two 10-year periods, or four 5-year periods between 1985 and 2005. Hausmann et al (2011) also find that economic complexity has a CONVERGENCE IN THE EU significant impact on the future economic growth of countries for four 10-year periods between 1978 and 2008, controlling for initial income and natural resource exports. This indicator is widely used; for instance, Felipe et al (2012) used it to rank 5,107 products and 124 countries.…”

Explaining the product range effect in purchase data

“…Second, we analyzed a static snapshot of retail, but it would be interesting to analyze the evolution of customer behavior. Finally, following [3], to create a network of products based on the customers buying them may lead to further insights.…”

“…For this reason, we need to evaluate at the same time the level of sophistication of a product and of the needs of a customer using the data in the purchase matrix, and recursively correct the one with the other. We adapt the procedure of [3], adjusting it for our big data.…”

“…We quantify them by evaluating the sophistication of each product and customer, following [3]. We find that the sophistication of a product is better than the price in explaining a customer's behavior.…”