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Product Complexity and Economic Development

Author

Listed:
  • Arnelyn Abdon
  • Marife Bacate
  • Jesus Felipe
  • Utsav Kumar

Abstract

We rank 5,107 products and 124 countries according to the Hidalgo and Hausmann (2009) measures of complexity. We find that: (1) 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; (2) the most complex economies in the world are Japan, Germany, and Sweden, and the least complex, Cambodia, Papua New Guinea, and Nigeria; (3) 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 (4) export shares of the more complex products increase with income, while export shares of the less complex products decrease with income. Finally, we relate the measure of product complexity with the concept of Complex Products and Systems, and find a high degree of conformity between them.

Suggested Citation

  • Arnelyn Abdon & Marife Bacate & Jesus Felipe & Utsav Kumar, 2010. "Product Complexity and Economic Development," Economics Working Paper Archive wp_616, Levy Economics Institute.
  • Handle: RePEc:lev:wrkpap:wp_616
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    References listed on IDEAS

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    1. Hobday, Mike, 1998. "Product complexity, innovation and industrial organisation," Research Policy, Elsevier, vol. 26(6), pages 689-710, February.
    2. Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
    3. Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 551-575.
    4. 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.
    5. 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.
    6. Hausmann, Ricardo & Hidalgo, César A., 2010. "Country Diversification, Product Ubiquity, and Economic Divergence," Scholarly Articles 4554740, Harvard Kennedy School of Government.
    7. Archibugi, Daniele & Coco, Alberto, 2004. "A New Indicator of Technological Capabilities for Developed and Developing Countries (ArCo)," World Development, Elsevier, vol. 32(4), pages 629-654, April.
    8. W. W. Rostow, 1959. "The Stages Of Economic Growth," Economic History Review, Economic History Society, vol. 12(1), pages 1-16, August.
    9. Lall, Sanjaya, 1992. "Technological capabilities and industrialization," World Development, Elsevier, vol. 20(2), pages 165-186, February.
    10. Ricardo Hausmann & Jason Hwang & Dani Rodrik, 2007. "What you export matters," Journal of Economic Growth, Springer, vol. 12(1), pages 1-25, March.
    11. 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.
    12. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
    13. 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.
    14. 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.
    15. repec:sae:ecolab:v:16:y:2006:i:2:p:1-2 is not listed on IDEAS
    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.
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    More about this item

    Keywords

    Capabilities; Development; Economic Complexity; Diversification; Method of Reflections; 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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