Economic Complexity Index
The Economic Complexity Index , (ECI) (German: Index of Economic Complexity) is a holistic measure of the productive capabilities of large economic systems , usually cities , regions or states . In particular, the ECI seeks to explain the knowledge accumulated in a population that is expressed in the economic activities of a city, country or region . In order to achieve this goal, the ECI defines the knowledge available in a place as the average knowledge of the activities there and the knowledge of an activity as the average knowledge of the places where this economic activity is carried out. The product equivalent of the Economic Complexity Index is the Product Complexity Index or PCI.
background
The ECI was developed by Cesar A. Hidalgo of the MIT Media Lab and Ricardo Hausmann of the Kennedy School of Government at Harvard University . The data from the ECI is available in The Observatory of Economic Complexity . The original formulation of the Economic Complexity Index was published in 2009 in the scientific journal PNAS .
formulation
In its strict mathematical definition , the ECI is defined as the eigenvector of a matrix that connects countries with other countries, that is, as a projection of the matrix that connects countries with the products they export. Since the ECI takes into account information about the diversity of countries and the ubiquity of products, it is able to establish a measure of economic complexity that contains information about the diversity of a country's exports as well as their level of development.
For example, Japan or Germany with high ECIs export many goods that have low ubiquity and that are produced by highly diversified countries, suggesting that they are diverse and highly developed economies . Low ECI countries, like Angola or Zambia , export few products that are of relatively high ubiquity and that are exported by countries that are not necessarily very diversified, suggesting that they are low- diversity countries and that the products they export are not very sophisticated.
Use
Hidalgo and Hausmann propose the concept of the ECI not only as a descriptive measure, but also as a forecasting tool for economic growth and income inequality . According to the statistical models presented in their Atlas of Economic Complexity (2011), the ECI is a more accurate predictor of per capita GDP growth than traditional measures of governance , competitiveness (Global Competitiveness Index of the World Economic Forum ) and human capital (measured by educational level ). The ECI also shows a strong negative correlation with income inequality, suggesting that more knowledge-intensive structures of production in terms of income distribution are more inclusive, and provides a more statistically meaningful explanation for cross-country variations in income inequality than the Kuznets curve .
See also
Individual evidence
- ^ Cesar A. Hidalgo, Ricardo Hausmann: The Building Blocks of Economic Complexity . In: PNAS (Ed.): Proceedings of the National Academy of Sciences . 106, No. 26, 2009, pp. 10570-10575. arxiv : 0909.3890 . bibcode : 2009PNAS..10610570H . doi : 10.1073 / pnas.0900943106 . PMID 19549871 . PMC 2705545 (free full text).
- ^ Ricardo Hausmann, Cesar Hidalgo: The Atlas of Economic Complexity . Puritan Press, Cambridge MA. Archived from the original on May 18, 2012. Retrieved April 26, 2012.