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building blocks of economic complexity

Proceedings of the National Academy of Sciences - PNAS, 2009-06, Vol.106 (26), p.10570-10575 [Peer Reviewed Journal]

Copyright National Academy of Sciences Jun 30, 2009 ;ISSN: 0027-8424 ;EISSN: 1091-6490 ;DOI: 10.1073/pnas.0900943106 ;PMID: 19549871

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Title:
building blocks of economic complexity
Author: Hidalgo, César A ; Hausmann, Ricardo
Subjects: Algorithms ; Children ; Commerce - economics ; Construction toys ; Developed Countries ; Developing Countries ; Division of labor ; Economic development ; Economic growth ; Economics ; Exports ; Gross domestic product ; Humans ; Income level ; Industry - economics ; International Cooperation ; International economics ; Labor economics ; Labor supply ; Models, Economic ; Physical Sciences ; Purchasing power parity ; Smith, Adam (1723-90) ; Social Sciences ; Wealth
Is Part Of: Proceedings of the National Academy of Sciences - PNAS, 2009-06, Vol.106 (26), p.10570-10575
Description: For Adam Smith, wealth was related to the division of labor. As people and firms specialize in different activities, economic efficiency increases, suggesting that development is associated with an increase in the number of individual activities and with the complexity that emerges from the interactions between them. Here we develop a view of economic growth and development that gives a central role to the complexity of a country's economy by interpreting trade data as a bipartite network in which countries are connected to the products they export, and show that it is possible to quantify the complexity of a country's economy by characterizing the structure of this network. Furthermore, we show that the measures of complexity we derive are correlated with a country's level of income, and that deviations from this relationship are predictive of future growth. This suggests that countries tend to converge to the level of income dictated by the complexity of their productive structures, indicating that development efforts should focus on generating the conditions that would allow complexity to emerge to generate sustained growth and prosperity.
Publisher: United States: National Academy of Sciences
Language: English
Identifier: ISSN: 0027-8424
EISSN: 1091-6490
DOI: 10.1073/pnas.0900943106
PMID: 19549871
Source: Geneva Foundation Free Medical Journals at publisher websites
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building blocks of economic complexity

Copyright National Academy of Sciences Jun 30, 2009 ;ISSN: 0027-8424 ;EISSN: 1091-6490 ;DOI: 10.1073/pnas.0900943106 ;PMID: 19549871

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