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Product complexity and economic development

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  • Felipe, Jesus
  • Kumar, Utsav
  • Abdon, Arnelyn
  • Bacate, Marife

Abstract

Development is a process of transforming a country's economic structure towards the production and export of more complex products. We use Hidalgo and Hausmann's (2009) method of reflections to compute measures of product and country complexity, and rank 5107 products and 124 countries. We find that: (i) the most complex products are in machinery, chemicals, and metals, while the least complex products are raw materials and commodities, wood, textiles, and agricultural products; (ii) the most complex economies in the world are Japan, Germany, and Sweden, and the least complex, Cambodia, Papua New Guinea, and Nigeria; (iii) the major exporters of the more complex products are the high-income countries, while the major exporters of the less complex products are the low-income countries; and (iv) export shares of the more complex products increase with income, while export shares of the less complex products decrease with income.

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Bibliographic Info

Article provided by Elsevier in its journal Structural Change and Economic Dynamics.

Volume (Year): 23 (2012)
Issue (Month): 1 ()
Pages: 36-68

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Handle: RePEc:eee:streco:v:23:y:2012:i:1:p:36-68

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Web page: http://www.elsevier.com/locate/inca/525148

Related research

Keywords: Capabilities; Economic complexity; Diversification; Product complexity; Ubiquity;

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References

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  1. Hausmann, Ricardo & Hwang, Jason & Rodrik, Dani, 2006. "What You Export Matters," CEPR Discussion Papers 5444, C.E.P.R. Discussion Papers.
  2. Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
  3. Daniele Archibugi & Alberto Coco, 2004. "A New Indicator of Technological Capabilities for Developed and Developing Countries (ArCo)," CEIS Research Paper 44, Tor Vergata University, CEIS.
  4. M. Desai, S. Fukuda-Parr, C. Johansson, and F. Sagasti, 2002. "Measuring Technology Achievement of Nations and the Capacity to Participate in the Network Age," Human Development Occasional Papers (1992-2007) HDOCPA-2002-22, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
  5. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
  6. Meghnad Desai & Sakiko Fukuda-Parr & Claes Johansson & Fransisco Sagasti, 2002. "Measuring the Technology Achievement of Nations and the Capacity to Participate in the Network Age," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 3(1), pages 95-122.
  7. Lall, Sanjaya & Weiss, John & Zhang, Jinkang, 2006. "The "sophistication" of exports: A new trade measure," World Development, Elsevier, vol. 34(2), pages 222-237, February.
  8. Kremer, Michael, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 551-75, August.
  9. Hobday, Mike, 1998. "Product complexity, innovation and industrial organisation," Research Policy, Elsevier, vol. 26(6), pages 689-710, February.
  10. Hobday, Michael & Rush, Howard & Bessant, John, 2004. "Approaching the innovation frontier in Korea: the transition phase to leadership," Research Policy, Elsevier, vol. 33(10), pages 1433-1457, December.
  11. Lall, Sanjaya, 1992. "Technological capabilities and industrialization," World Development, Elsevier, vol. 20(2), pages 165-186, February.
  12. Archibugi, Daniele & Coco, Alberto, 2005. "Measuring technological capabilities at the country level: A survey and a menu for choice," Research Policy, Elsevier, vol. 34(2), pages 175-194, March.
  13. W. W. Rostow, 1959. "The Stages Of Economic Growth," Economic History Review, Economic History Society, vol. 12(1), pages 1-16, 08.
  14. repec:sae:ecolab:v:16:y:2006:i:2:p:1-2 is not listed on IDEAS
  15. Virginia Acha & Andrew Davies & Michael Hobday & Ammon Salter, 2004. "Exploring the capital goods economy: complex product systems in the UK," Industrial and Corporate Change, Oxford University Press, vol. 13(3), pages 505-529, June.
  16. Hobday, Mike & Rush, Howard & Tidd, Joe, 2000. "Innovation in complex products and system," Research Policy, Elsevier, vol. 29(7-8), pages 793-804, August.
  17. Thomas Hatzichronoglou, 1997. "Revision of the High-Technology Sector and Product Classification," OECD Science, Technology and Industry Working Papers 1997/2, OECD Publishing.
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Citations

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Cited by:
  1. Poncet, Sandra & Starosta de Waldemar, Felipe, 2013. "Export Upgrading and Growth: The Prerequisite of Domestic Embeddedness," World Development, Elsevier, vol. 51(C), pages 104-118.
  2. Funke, Michael & Chen, Xi, 2012. "The dynamics of catch-up and skill and technology upgrading in China," BOFIT Discussion Papers 13/2012, Bank of Finland, Institute for Economies in Transition.
  3. Gnidchenko, A., 2014. "Improving the Methods for Estimating the Structure and the Basis of Export Potential through Export Diversification," Journal of the New Economic Association, New Economic Association, vol. 21(1), pages 83-109.
  4. Clovis Freire, . "Building Productive Capacities: Challenges and Opportunities for Least Developed Countries," MPDD Working Paper Series WP/12/02, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  5. Jesus Felipe & John McCombie, 2010. "Modeling Technological Progress and Investment in China: Some Caveats," Economics Working Paper Archive wp_643, Levy Economics Institute.
  6. Burak Saltoðlu & Devrim Yýlmaz, 2013. "Why is it so Difficult and Complex to Solve the Euro Problem?," Working Papers 2013/02, Bogazici University, Department of Economics.
  7. Clovis Freire, . "Productive Capacities in Asia and the Pacific," MPDD Working Paper Series WP/11/17, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  8. Arnelyn Abdon & Jesus Felipe, 2011. "The Product Space: What Does It Say About the Opportunities for Growth and Structural Transformation of Sub-Saharan Africa?," Economics Working Paper Archive wp_670, Levy Economics Institute.

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