Atlas of Economic Complexity: Mapping Paths to Growth

It is finally out!*
Ricardo Hausmann and Cesar Hidalgo’s latest baby is out and is downloadable here.
The Atlas measures the diversity of productive knowledge of 128 countries, and determines their growth potential accordingly. The top 10 countries are *drum roll* (extract from the press release):

China (1), India (2) and Thailand (3) top the rankings for per capita growth potential followed by Belarus (4), Moldova (5), Zimbabwe (6), Ukraine (7), Bosnia and Herzegovina (8), Panama (9), and Mexico (10). For these countries, the current level of productive knowledge is unusually high for their level of income which should allow them to catch up faster than other nations.

Here’s why it may revive the lethargic discourse on growth :

  • In essence, it is a simple theory: that future growth is determined by current economic complexity, and that countries grow by accumulating collective knowledge.
  • Predictive value: the authors claim that their measure of complexity explains growth variations more accurately than education, governance and competitiveness measures combined (including the World Economic Forum’s Global Competitiveness Index).
  • It is a new way of visualizing data, making it possible to digest 4 dimensions in one graph.
  • It ranks countries according to their future expected growth. And, well, ranking is sexy.

The most interesting spins of this work might come from applying it to production within countries rather than among countries – comparing cities and regions, and including non-tradables data in the analysis.

But as the subtitle indicates, this tool is just a map. The compass of economic growth remains a search to be customized to each country.

Map of Expected GDP Growth to 2020 [return of the convergence theory?] :

* perks of being a teaching assistant to Prof. Hausmann’s class: getting to work with the atlas for the past month

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