Skip to main content

Economic Complexity Index and Country Performance

One of the growing forces in our understanding of what drives growth in different countries is the Harvard and MIT designed Economic Complexity Index (ECI). According to Harvard's Atlas of Economic Complexity, ECI is "a measure of the knowledge in a society that gets translated into the products it makes. The most complex products are sophisticated chemicals and machinery, whereas the world’s least complex products are raw materials or simple agricultural products. The economic complexity of a country is dependent on the complexity of the products it exports. A country is considered ‘complex’ if it exports not only highly complex products (determined by the PRODUCT COMPLEXITY INDEX), but also a large number of different products."

Below is a motion chart showing the ECI and country rankings against measures of economic performance, namely GDP per person. The default graph setting has real GDP per capita on the x axis (the further right the richer a country is) and ECI rank on the y axis (the lower the more complex a country is). Bubble size is nominal GDP per capita. One can see that in 1964, Denmark, Norway, and Sweden had the highest GDP per person and correspondingly complex economies as shown by their rankings. On the lower end were Gabon, Sudan, and Nigeria, which ranked 97, 95, and 94th in economic complexity. Select these 6 countries on the bottom right menu and follow their progress in economic complexity and GDP. You will observe that initially complex countries tend to grow fast while initially less complex ones generally remained poor. Resource rich countries are the exception to the rule (high per capita incomes despite less complex economies).

Comments

Post a Comment

Constructive feedback is always welcome. Thank you

Popular posts from this blog

Malaysia at a Cross Roads: Diagnosing the Constraints to High Income Status

Malaysia at a Crossroads: Diagnosing Constraints to High-Income Status In 2008, Malaysia was recognized by the Growth Commission – a distinguished panel comprising 2 Nobel Prize Winning Economists and other leading development practitioners – as one of thirteen countries that sustained high growth in the post-war period. The 30-year stretch that caught the attention of the Growth Commission was between 1967 and 1997 when Malaysia grew at an average of 7.3% per year. This long stretch of growth was interrupted by periods of external shocks including the Volcker shock of 1986, the Asian Financial crisis in 1997/8, later the so-called Dot Com Bubble of 2001, and more recently the Global Financial Crisis of 2008. Despite these shocks, Malaysia remained resilient - formally earning the title "Upper Middle Income Country" in 1992. (See summary figure that breaks down the country's per capita growth story). As...
2 comments
Read more

Unemployment by state in the USA

Below is a visualization of unemployment rates by county using a powerful Python library called Bokeh . The two maps are for the states of Texas and the Commonwealth of Massachusetts. As the second largest economy in the United States (10th largest in the world), Texas shows interesting county variation in macroeconomic factors such as unemployment. According to Wikipedia , in 2015, Texas was home to six of the top 50 companies on the Fortune 500 list and 51 overall (third most after New York and California). The northern counties were least affected by the financial crisis of 2008/09. Dallas–Fort Worth–Arlington area encompasses 13 counties which constitute the economic and cultural hub of the region commonly called North Texas or North Central Texas. Bokeh Plot The least affected counties in Massachusetts were the southernmost tourist areas of Nantuckett and Dukes County. The ...
Post a Comment
Read more

Modeling Core PCE inflation: A dual approach

Today's release of the August 2025 Personal Consumption Expenditures (PCE) inflation data drew widespread media attention, with coverage highlighting both the persistence of inflation and its implications for Federal Reserve policy. Across outlets, analysts pointed to resilient consumer spending and income growth as signs of underlying economic strength, even as inflation remains above the Fed's 2% target. The consensus among media reports is that while inflation is not worsening, its stubbornness continues to challenge policymakers navigating a softening labor market and evolving rate expectations. To provide deeper insights into inflation's trajectory, I've developed a forecasting framework that combines two econometric approaches — ARIMA time series modeling and Phillips Curve analysis—to predict Core PCE inflation. This analysis presents a unique opportunity to validate my forecasting methodology against eight months of 2025 data. ...
Post a Comment
Read more