Page 17 - The Atlas of Economic Complexity

18 | THE ATLAS OF ECONOMIC COMPLEXITY

How Do We Measure Economic Complexity?

gating the personbytes required to generate power, provide that have it retire or die.
clean water, and run a transportation system. The relevant Said differently, countries do not simply make the prod-
capabilities to perform all of these functions reside in orga- ucts and services they need. They make the ones they can.
nizations that are able to package the relevant knowledge To do so, they need people and organizations that possess
into transferable bundles. These are bundles of knowhow relevant knowledge. Some goods, like medical imaging de-
that are more efficiently organized separately and trans- vices or jet engines, embed large amounts of knowledge
ferred as intermediate inputs. We can think of these bun- and are the results of very large networks of people and or-
dles as organizational capabilities the manufacturer needs. ganizations. By contrast, wood logs or coffee, embed much
Ultimately, the complexity of an economy is related to less knowledge, and the networks required to support these
the multiplicity of useful knowledge embedded in it. For operations do not need to be as large. Complex economies
a complex society to exist, and to sustain itself, people who are those that can weave vast quantities of relevant knowl-
know about design, marketing, finance, technology, human edge together, across large networks of people, to generate
resource management, operations and trade law must be a diverse mix of knowledge-intensive products. Simpler
able to interact and combine their knowledge to make prod- economies, in contrast, have a narrow base of productive
ucts. These same products cannot be made in societies that knowledge and produce fewer and simpler products, which
are missing parts of this capability set. Economic complex- require smaller webs of interaction. Because individuals
ity, therefore, is expressed in the composition of a coun- are limited in what they know, the only way societies can
try’s productive output and reflects the structures that expand their knowledge base is by facilitating the interac-
emerge to hold and combine knowledge. tion of individuals in increasingly complex webs of orga-
Knowledge can only be accumulated, transferred and nizations and markets. Increased economic complexity is
preserved if it is embedded in networks of individuals and necessary for a society to be able to hold and use a larger
organizations that put this knowledge into productive use. amount of productive knowledge, and we can measure it
Knowledge that is not used, however, is also not transferred, from the mix of products that countries are able to make.
and will disappear once the individuals and organization