Understanding Economic Complexity: An Application to the MER Sector

The process of measuring economic complexity is data-centric, with the existence of a set of capabilities being proxied by the ability of a country to export a related set of products competitively. [...] If the global economy is considered to be a network linking products and countries, then the diversity of a country (? ? ? ? ,? ? ) is the number of products that it links to, while the ubiquity of a product (? ? ? ? ,? ? ) is the 6 Trade date is used in complexity analysis as it allows for the comparison across a wide cross-section of countries over long time periods, while using a consistent set. [...] In this paper a cleaned version of the UN COMTRADE database, made available by The Growth Lab at Harvard University (2019), is used.11 The available variables include: the reporting country; its trade partner; the product’s Harmonised System (HS) code and description at the 6-digit and 4-digit levels; the year; the direction of the trade (export or import); and the value in US dollar terms. [...] When plotting the relationship between log GDP per capita and MCI in 2016, as in Figure 3, the prevalence of low complexity manufacturing within the low- to middle-income income cohort is illustrated by the large clump of countries in the bottom-left quadrant of the graph. [...] Quantifying the difference between the shapes of these distributions, Table 3 shows that the mean and median PCI for the MER sector products are both approximately 2, nearly double that of the corresponding measures for the full sample of products.