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Indicators of Product Sophistication and Factor Intensities: Measurement Matters

In: Product Characteristics in International Economics

Author

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  • Stephan Huber

    (University of Regensburg)

Abstract

The widely used PRODY indicator by Hausmann et al. (J Econ Growth 12(1):1–25, 2007) allows the calculation of product sophistication and factor intensities at high levels of disaggregation. In this chapter I deal with its measurement, its conceptional limitations, its sensitivity to subjective decision making, its alternatives, and how to reap the best possible benefit from its usage. I introduce a theory-based alternative and investigate the sensitivity of empirical results with respect to different measures. In particular, I re-estimate the main results of Hausmann et al. (J Econ Growth 12(1):1–25, 2007) with 75 different measures. Small changes to the sample, the aggregation level, or the construction of the indicator can make a difference. Moreover, I offer two Stata programs that ease the calculation of various PRODY variants.

Suggested Citation

  • Stephan Huber, 2018. "Indicators of Product Sophistication and Factor Intensities: Measurement Matters," Contributions to Economics, in: Product Characteristics in International Economics, chapter 0, pages 9-50, Springer.
    • Handle: RePEc:spr:conchp:978-3-319-76093-3_2
    DOI: 10.1007/978-3-319-76093-3_2
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    Cited by:

    1. Andrey A. Gnidchenko, 2019. "The Conflicting Ways to Dissect Intra-Industry Trade," FIW Working Paper series 193, FIW.
    2. Minglong Kou & Hui Sun & Long Xin & Keping Men & Xinjie Yan, 2023. "International Industrial Transfer, Green Technological Innovation, and Manufacturing Global Value Chain Status," Sustainability, MDPI, vol. 15(9), pages 1-18, April.
    3. Zheng, Hong-Hao & Wang, Zheng-Xin, 2019. "Measurement and comparison of export sophistication of the new energy industry in 30 countries during 2000–2015," Renewable and Sustainable Energy Reviews, Elsevier, vol. 108(C), pages 140-158.
    4. Frensch, Richard & Horvath, Roman & Huber, Stephan, 2021. "Openness effects on the rule of law: Size and patterns of trade," International Review of Law and Economics, Elsevier, vol. 68(C).
    5. Karishma Banga, 2022. "Digital Technologies and Product Upgrading in Global Value Chains: Empirical Evidence from Indian Manufacturing Firms," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(1), pages 77-102, February.

    More about this item

    Keywords

    Sophisticated Products; Endowment Data; Revealed Comparative Advantage Index; Standard International Trade Classification (SITC); Trade Weights;
    All these keywords.

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values

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