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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.

Suggested Citation

  • Felipe, Jesus & Kumar, Utsav & Abdon, Arnelyn & Bacate, Marife, 2012. "Product complexity and economic development," Structural Change and Economic Dynamics, Elsevier, vol. 23(1), pages 36-68.
  • Handle: RePEc:eee:streco:v:23:y:2012:i:1:p:36-68
    DOI: 10.1016/j.strueco.2011.08.003
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    References listed on IDEAS

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    Cited by:

    1. Clovis Freire, 2017. "Promoting structural transformation: strategic diversification vs. laissez-faire approach," Working Papers 151, United Nations, Department of Economics and Social Affairs.
    2. Sekkat, Khalid, 2016. "Exchange rate misalignment and export diversification in developing countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 59(C), pages 1-14.
    3. Clovis Freire, "undated". "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).
    4. Ferrarini, Benno & Scaramozzino, Pasquale, 2016. "Production complexity, adaptability and economic growth," Structural Change and Economic Dynamics, Elsevier, vol. 37(C), pages 52-61.
    5. 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.
    6. Chen, Xi & Funke, Michael, 2013. "The dynamics of catch-up and skill and technology upgrading in China," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 465-480.
    7. Jesus Felipe & John McCombie, 2010. "Modeling Technological Progress and Investment in China: Some Caveats," Economics Working Paper Archive wp_643, Levy Economics Institute.
    8. 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.
    9. 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.
    10. Hartmann, Dominik & Guevara, Miguel R. & Jara-Figueroa, Cristian & Aristarán, Manuel & Hidalgo, César A., 2017. "Linking Economic Complexity, Institutions, and Income Inequality," World Development, Elsevier, vol. 93(C), pages 75-93.
    11. 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.
    12. Gustavo Britto & João Prates Romero & Elton Freitas & Marcelo Tonne & Clara Coelho, 2015. "Competitividade industrial, complexidade e intensidade tecnológica em Portugal," Textos para Discussão Cedeplar-UFMG 522, Cedeplar, Universidade Federal de Minas Gerais.
    13. Cyrielle Gaglio, 2015. "Measuring Country Competitiveness: A Survey of Exporting-based Indexes," GREDEG Working Papers 2015-42, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    14. Clovis Freire, "undated". "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).
    15. repec:erc:cypepr:v:11:y:2017:i:2:p:19-62 is not listed on IDEAS
    16. Servaas Storm & C.W.M. Naastepad, "undated". "Crisis and Recovery in the German Economy: The Real Lessons," Working Papers Series 10, Institute for New Economic Thinking.
    17. Lehtonen, Olli & Tykkyläinen, Markku, 2014. "Delphi path simulator for unveiling development opportunities in the forest industries by contrasting forest management practices — The case of North Karelia," Technological Forecasting and Social Change, Elsevier, vol. 84(C), pages 171-185.
    18. Freire Junior, Clovis, 2017. "Promoting structural transformation: Strategic diversification vs laissez-faire approach," MERIT Working Papers 037, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    19. Saleh Albeaik & Mary Kaltenberg & Mansour Alsaleh & Cesar A. Hidalgo, 2017. "Improving the Economic Complexity Index," Papers 1707.05826, arXiv.org, revised Jul 2017.
    20. Mazhikeyev, Arman & Edwards, T. Huw & Rizov, Marian, 2015. "Openness and isolation: The trade performance of the former Soviet Central Asian countries," International Business Review, Elsevier, vol. 24(6), pages 935-947.
    21. Julia Langbein, 2014. "JCMS Special Issue 2014: Eastern Enlargement Ten Years On: Transcending the East-West Divide? Guest Editors: Rachel A. Epstein and Wade Jacoby," Journal of Common Market Studies, Wiley Blackwell, vol. 52(1), pages 157-174, January.

    More about this item

    Keywords

    Capabilities; Economic complexity; Diversification; Product complexity; Ubiquity;

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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