Page 28 - The Atlas of Economic Complexity

MAPPING PATHS TO PROSPERITY | 29

FIGURE 3.3:
Shows the relationship between the annualized GDP per capita growth for the period between 1998 and 2008 and the Economic Complexity Index for 1998, after taking into
account the initial level of income and the increase in natural resource exports during that period (in constant dollars as a share of initial GDP).

CHN
TKM
.05 CUB KHM LVA LTU KAZ BLR RUS BGR GEO UKR
Growth in per capita GDP, controlling for initial income and growth in natural resource exports [1998-2008] 0 ARE AUS SLV MUS HKG CRI DOM NIC HND GRC NGA NOR AGO LBN MAR PRT GHA TZA LKA TUR EGY MKD ESPPHL COL ZAF BRA MYS LAO HRV IRL VNM ETH USA UZB AUT IDN JOR CHE HUN GBR ROU AZE BIH JPN DEU TJK CZE KGZ IND
EST

ALB
TTO
SVK
KOR
SGP
SVN
MDA
POL
PAN
THA
TUN
FIN
SWE
UGA
BGD
MNG
MOZ
PER
IRN
BEL
NZL
CAN
NLD
ISR
OMN
ARG
CHL
FRA
DNK
ECU
URY
MEX
PAK
ZMB
MLI
ITA
VEN
SEN
JAM
CMR
SAU
MDG
COG GIN GTM DZA SYR YEM KENMRT BOL PRY LBR
GAB PNG
-.05 CIV
-1 0 1
Economic Complexity Index controlling for initial income and growth in natural resource export [1998]

able that we use here to estimate the growth potential of a measure of export diversification. Controlling for standard
countries (Figure 3.3). measures of export concentration, such as the Herfindahl-
It is important to note what the Economic Complexity Hirschman Index, does not affect our results. In fact, neither
Index is not about: it is not about export-oriented growth, openness nor export concentration are statistically signifi-
openness, export diversification or country size. Although cant determinants of growth after controlling for the ECI
we calculate the ECI using export data, the channel through (see Technical Box 3.2).
which it contributes to future growth is not limited to its Finally, the ECI is not about a country’s size. The ability of
impact on the growth of exports. Clearly, countries whose the ECI to predict growth is unaffected when we take into
exports grow faster, all other things being equal, will neces- account a country’s size, as measured by its population,
sarily experience higher GDP growth. This is simply because while the population itself is not statistically significant (see
exports are a component of GDP. However, as Technical Box Technical Box 3.2).
3.2 shows, the contribution of the ECI to future economic In short, economic complexity matters because it helps
growth remains strong after accounting for the growth in explain differences in the level of income of countries,
real exports. and more important, because it predicts future economic
The ECI is also not about openness to trade: the impact of growth. Economic complexity might not be simple to ac-
the ECI on growth is essentially unaffected if we account for complish, but the countries that do achieve it, tend to reap
differences in the ratio of exports to GDP. And the ECI is not important rewards.