Economic complexity index

Last updated
Rank in the economic complexity index (2015) Rank in the Economic Complexity Index, OWID.svg
Rank in the economic complexity index (2015)

The economic complexity index (ECI) is a holistic measure of the productive capabilities of large economic systems, usually cities, regions, or countries. In particular, the ECI looks to explain the knowledge accumulated in a population and that is expressed in the economic activities present in a city, country, or region. To achieve this goal, the ECI defines the knowledge available in a location, as the average knowledge of the activities present in it, and the knowledge of an activity as the average knowledge of the places where that economic activity is conducted. The product equivalent of the economic complexity index is the product complexity index or PCI.

Contents

Higher economic complexity as compared to country's income level drives economic development.

Background

The ECI was developed by Cesar A. Hidalgo, from the MIT Media Lab and Ricardo Hausmann, from Harvard University's Kennedy School of Government. ECI data is available in The Observatory of Economic Complexity. The original formulation of the economic complexity index was published in PNAS in 2009. [1]

Formulation

In its strict mathematical definition, the ECI is defined in terms of an eigenvalue of a matrix connecting countries to countries, which is a projection of the matrix connecting countries to the products they export. Since the ECI considers information on the diversity of countries and the ubiquity of products, it is able to produce a measure of economic complexity containing information about both the diversity of a country's exports and their sophistication. For example, Japan or Germany, with high ECIs, export many goods that are less common and that are produced by highly diversified countries, indicating that these are diverse and sophisticated economies. Countries with low ECI, like Angola or Botswana, export only a few products, which are of relatively high ubiquity and which are exported by countries that are not necessarily very diversified, indicating that these are countries that have little diversity and that the products that they export are not very sophisticated.

Utility

Hidalgo and Hausmann propose the concept of ECI not only as a descriptive measure, but also as a predictive tool for economic growth and income inequality. According to the statistics models presented in their Atlas of Economic Complexity (2011), [2] the ECI is a more accurate predictor of GDP per capita growth than traditional measures of governance, competitiveness (World Economic Forum's Global Competitiveness Index) and human capital (as measured in terms of educational attainment). ECI also shows a strong negative correlation with income inequality, suggesting that more knowledge intense productive structures are more inclusive in terms of income distribution, and providing a statistically more powerful explanation of cross-national variations in income inequality than Kuznets Curve. [3]

Economic development requires the accumulation of productive knowledge and its use in both more and more complex industries. According to this metric, many low-income countries, including Bangladesh, Venezuela, and Angola have failed to diversify their know-how and face low growth prospects while those like India, Turkey, and the Philippines have added productive capabilities to enter new sectors and are expected by some drive growth over the coming years. [4]

The Economic Complexity Index was initially developed using trade data but its application has expanded to include other data sources, such as patents [5] and scientific publications, [6] enabling a broader examination of economic and innovation ecosystems.

Country rankings 2023

Country Complexity Rankings [7]

RankCountryIndex
(2023)
5-year change

(2018 vs 2023)

10-year
change
1Japan2.07Steady2.svg
2Taiwan2Increase2.svg 1
3Switzerland1.96Decrease2.svg 2
4South Korea1.85Increase2.svg 1
5Germany1.79Decrease2.svg 2
6Singapore1.62Decrease2.svg 1
7Czechia1.6Steady2.svg
8Austria1.56Increase2.svg 2
9Sweden1.53Decrease2.svg 1
10United States1.5Decrease2.svg 1
11United Kingdom1.5Increase2.svg 2
12Slovenia1.48Decrease2.svg 1
13Finland1.46Decrease2.svg 1
14Hungary1.41Steady2.svg
15Slovakia1.35Increase2.svg 1
16France1.34Decrease2.svg 1
17Ireland1.31Increase2.svg 2
18Italy1.29Decrease2.svg 1
19Israel1.28Increase2.svg 1
20Belgium1.23Decrease2.svg 2
21China1.16Increase2.svg 7
22Denmark1.13Increase2.svg 1
23Hong Kong1.12Increase2.svg 4
24Poland1.09Decrease2.svg 3
25Mexico1.09Decrease2.svg 3
26Netherlands1.08Decrease2.svg 2
27Malaysia1.04Decrease2.svg 2
28Romania1.02Decrease2.svg 2
29Thailand0.96Steady2.svg
30Canada0.86Steady2.svg
31Spain0.85Increase2.svg 1
32Lithuania0.81Increase2.svg 2
33Belarus0.76Steady2.svg
34Croatia0.76Increase2.svg 1
35Serbia0.76Increase2.svg 1

Country rankings 2021

Country Complexity Rankings [8]
RankCountryIndex
(2021)
5-year
change
10-year
change
1Japan2.06Steady2.svgSteady2.svg
2Switzerland1.94Steady2.svgIncrease2.svg 1
3Taiwan1.93Increase2.svg 4Increase2.svg 9
4South Korea1.82Decrease2.svg 2Decrease2.svg 2
5Germany1.81Steady2.svgDecrease2.svg 1
6Singapore1.74Decrease2.svg 2Increase2.svg 1
7Czechia1.56Decrease2.svg 1Increase2.svg 2
8Sweden1.54Steady2.svgDecrease2.svg 3
9Austria1.50Steady2.svgIncrease2.svg 5
10United States1.46Increase2.svg 3Increase2.svg 3
11United Kingdom1.43Increase2.svg 1Increase2.svg 1
12Slovenia1.42Increase2.svg 2Decrease2.svg 1
13Finland1.42Decrease2.svg 2Decrease2.svg 5
14Hungary1.36Decrease2.svg 2Increase2.svg 3
15France1.35Steady2.svgIncrease2.svg 1
16Slovakia1.31Decrease2.svg 2Decrease2.svg 1
17Ireland1.29Steady2.svgDecrease2.svg 7
18Belgium1.28Steady2.svgIncrease2.svg 6
19Italy1.27Steady2.svgSteady2.svg
20Israel1.21Increase2.svg 6Increase2.svg 3
21Hong Kong1.16Decrease2.svg 1Decrease2.svg 1
22Netherlands1.09Increase2.svg 2Increase2.svg 9
23Mexico1.09Steady2.svgDecrease2.svg 2
24Malaysia1.09Decrease2.svg 3Decrease2.svg 6
25China1.07Steady2.svgIncrease2.svg 5
26Romania1.07Increase2.svg 3Increase2.svg 1
27Denmark1.02Steady2.svgDecrease2.svg 5
28Poland1.01Increase2.svg 2Increase2.svg 4
29Thailand0.97Decrease2.svg 7Decrease2.svg 1
30Lithuania0.91Increase2.svg 1Decrease2.svg 1
31Saudi Arabia0.90Increase2.svg 5Increase2.svg 10
32Canada0.90Decrease2.svg 4Decrease2.svg 7
33Belarus0.84Increase2.svg 1Increase2.svg 1
34Croatia0.81Increase2.svg 3Increase2.svg 6
35Spain0.78Increase2.svg 3Increase2.svg 10
36Serbia0.74Increase2.svg 33Increase2.svg 71
37Philippines0.72Decrease2.svg 4Increase2.svg 1
38Norway0.69Increase2.svg 1Decrease2.svg 2
39Bosnia and Herzegovina0.65Increase2.svg 2Steady2.svg
40Bulgaria0.63Increase2.svg 2Increase2.svg 2
41India0.61Decrease2.svg 1Increase2.svg 5
42Turkey0.61Increase2.svg 10Increase2.svg 8
43Portugal0.56Decrease2.svg 8Decrease2.svg 8
44Ukraine0.49Decrease2.svg 1Steady2.svg
45Russia0.46Steady2.svgDecrease2.svg 2
46New Zealand0.46Decrease2.svg 2Increase2.svg 8
47Lebanon0.35Increase2.svg 4Increase2.svg 10
48Kuwait0.34Increase2.svg 10Increase2.svg 37
49Brazil0.33Decrease2.svg 2Decrease2.svg 1
50Greece0.32Decrease2.svg 4Decrease2.svg 24
51Panama0.31Decrease2.svg 1Decrease2.svg 2
52Costa Rica0.24Increase2.svg 11Increase2.svg 11
53Tunisia0.22Increase2.svg 2Increase2.svg 7
54North Macedonia0.20Decrease2.svg 5Decrease2.svg 3
55United Arab Emirates0.16Increase2.svg 2Decrease2.svg 3
56Colombia0.14Increase2.svg 4Decrease2.svg 3
57Uruguay0.10Increase2.svg 11Increase2.svg 8
58Vietnam0.10Increase2.svg 24Increase2.svg 23
59South Africa0.10Decrease2.svg 11Increase2.svg 8
60Argentina0.07Decrease2.svg 6Decrease2.svg 5
61Indonesia0.04Increase2.svg 1Increase2.svg 1
62Jordan0.03Increase2.svg 18Increase2.svg 6
63Dominican Republic−0.00Decrease2.svg 7Decrease2.svg 7
64Georgia−0.01Increase2.svg 1Decrease2.svg 3
65Moldova−0.02Decrease2.svg 1Increase2.svg 21
66El Salvador−0.04Increase2.svg 1Increase2.svg 4
67Iran−0.09Decrease2.svg 6Decrease2.svg 34
68Egypt−0.10Increase2.svg 25Increase2.svg 28
69Kyrgyzstan−0.12Decrease2.svg 3Increase2.svg 3
70Qatar−0.17Increase2.svg 4Decrease2.svg 6
71Armenia−0.19Decrease2.svg 18Decrease2.svg 13
72Albania−0.19Steady2.svgIncrease2.svg 1
73Oman−0.20Decrease2.svg 14Decrease2.svg 14
74Chile−0.22Decrease2.svg 42Decrease2.svg 37
75Jamaica−0.23Increase2.svg 14Increase2.svg 36
76Guatemala−0.24Increase2.svg 7Steady2.svg
77Kazakhstan−0.28Decrease2.svg 2Increase2.svg 1
78Morocco−0.28Decrease2.svg 1Decrease2.svg 9
79Uzbekistan−0.38Decrease2.svg 8Decrease2.svg 32
80Paraguay−0.38Increase2.svg 18Increase2.svg 9
81Sri Lanka−0.39Decrease2.svg 3Decrease2.svg 15
82Australia−0.41Decrease2.svg 9Decrease2.svg 11
83Kenya−0.46Increase2.svg 14Increase2.svg 17
84Honduras−0.50Increase2.svg 11Decrease2.svg 9
85Azerbaijan−0.52Increase2.svg 33Decrease2.svg 8
86Turkmenistan−0.55Decrease2.svg 2Increase2.svg 5
87Pakistan−0.55Increase2.svg 3Decrease2.svg 5
88Senegal−0.59Increase2.svg 12Increase2.svg 28
89Benin−0.61Decrease2.svg 2Decrease2.svg 1
90Niger−0.62Increase2.svg 1Increase2.svg 12
91Peru−0.63Decrease2.svg 6Decrease2.svg 4
92Cambodia−0.64Decrease2.svg 11Decrease2.svg 18
93Botswana−0.67Increase2.svg 16Decrease2.svg 1
94Tajikistan−0.69Decrease2.svg 15Increase2.svg 12
95Laos−0.70Decrease2.svg 7Decrease2.svg 2
96Zambia−0.74Increase2.svg 12Increase2.svg 5
97Namibia−0.77Increase2.svg 19Increase2.svg 7
98Zimbabwe−0.78Decrease2.svg 4Decrease2.svg 1
99Ethiopia−0.80Decrease2.svg 3Decrease2.svg 20
100Togo−0.81Increase2.svg 19Increase2.svg 33
101Bangladesh−0.85Decrease2.svg 31Increase2.svg 21
102Burma−0.85Decrease2.svg 16Decrease2.svg 12
103Algeria−0.88Decrease2.svg 4Increase2.svg 2
104Ecuador−0.89Decrease2.svg 12Decrease2.svg 20
105Uganda−0.92Decrease2.svg 3Decrease2.svg 7
106Bolivia−0.97Increase2.svg 11Increase2.svg 2
107Republic of the Congo−1.02Increase2.svg 13Increase2.svg 11
108Nicaragua−1.03Decrease2.svg 2Decrease2.svg 14
109Madagascar−1.07Decrease2.svg 2Decrease2.svg 26
110Venezuela−1.08Increase2.svg 1Increase2.svg 5
111Tanzania−1.09Increase2.svg 4Increase2.svg 6
112Iraq−1.12Decrease2.svg 7Decrease2.svg 13
113Yemen−1.15Decrease2.svg 12Decrease2.svg 18
114Libya−1.18Increase2.svg 18Increase2.svg 13
115Cote d'Ivoire−1.19Decrease2.svg 1Decrease2.svg 12
116Afghanistan−1.20Decrease2.svg 4Increase2.svg 3
117Mongolia−1.23Decrease2.svg 41Decrease2.svg 37
118Ghana−1.27Decrease2.svg 15Decrease2.svg 6
119Mauritania−1.32Increase2.svg 2Increase2.svg 1
120Sudan−1.33Decrease2.svg 16Decrease2.svg 10
121Cameroon−1.36Decrease2.svg 8Decrease2.svg 7
122Mozambique−1.36Increase2.svg 7Increase2.svg 2
123Gabon−1.41Decrease2.svg 1Decrease2.svg 4
124Angola−1.37Increase2.svg 1Decrease2.svg 3
125Mali−1.43Increase2.svg 3Increase2.svg 3
126Nigeria−1.53Increase2.svg 4Steady2.svg
127Burkina Faso−1.79Decrease2.svg 4Decrease2.svg 2
128Democratic Republic of the Congo−1.81Increase2.svg 5Increase2.svg 1
129Papua New Guinea−1.84Decrease2.svg 19Decrease2.svg 20
130Guinea−1.84Decrease2.svg 3Decrease2.svg 3
131Chad−1.93Decrease2.svg 7Steady2.svg

See also

References

  1. Cesar A. Hidalgo, Ricardo Hausmann (2009). "The Building Blocks of Economic Complexity". Proceedings of the National Academy of Sciences. 106 (26). PNAS: 10570–10575. arXiv: 0909.3890 . Bibcode:2009PNAS..10610570H. doi: 10.1073/pnas.0900943106 . PMC   2705545 . PMID   19549871.
  2. Ricardo Hausmann, Cesar Hidalgo; et al. "The Atlas of Economic Complexity". Puritan Press, Cambridge MA. Archived from the original on 18 May 2012. Retrieved 26 April 2012.
  3. Dominik Hartmann, Miguel Guevara, Cristian Jara-Figueroa, Manuel Aristaran, Cesar Hidalgo (2018), "Linking Economic Complexity, Institutions, and Income Inequality", World Development, 93: 75–93, arXiv: 1505.07907 , doi:10.1016/j.worlddev.2016.12.020, S2CID   45386522 {{citation}}: CS1 maint: multiple names: authors list (link)
  4. "India tops list of fastest growing economies for coming decade: Harvard study". The Economic Times. 2020-05-04. Retrieved 2020-10-31.
  5. Balland, Pierre-Alexandre; Rigby, David (January 2017). "The Geography of Complex Knowledge". Economic Geography. 93 (1): 1–23. doi:10.1080/00130095.2016.1205947. ISSN   0013-0095.
  6. Balland, Pierre-Alexandre; Jara-Figueroa, Cristian; Petralia, Sergio G.; Steijn, Mathieu P. A.; Rigby, David L.; Hidalgo, César A. (March 2020). "Complex economic activities concentrate in large cities". Nature Human Behaviour. 4 (3): 248–254. arXiv: 1807.07887 . doi:10.1038/s41562-019-0803-3. ISSN   2397-3374.
  7. "ECI Rankings (HS96)". The Observatory of Economic Complexity. Retrieved 2025-03-15.
  8. "Complexity rankings The Observatory of Economic Complexity". OEC. Archived from the original on 2023-10-28. Retrieved 2023-05-02.