Page 35 - The Atlas of Economic Complexity

36 | THE ATLAS OF ECONOMIC COMPLEXITY

FIGURE 4.4:
Years of schooling of Thailand and Ghana as a function of time.

8
Ghana Thailand

Years of Schooling 6 4

2
1960 1970 1980 1990 2000 2010
Year

improved methodologically, going through two major revi-
sions in 2001 and 2006. By 1995, the GCR ranked less than
FIGURE 4.5:
50 countries, but over the years this number has increased,
Economic Complexity Index (ECI) of Thailand and Ghana as a function of time.
now reaching over 130 countries. The claim of the Global
Competitiveness Report is that the index captures the fun-
2 damental variables that drive growth over the medium term:
Ghana Thailand “We define competitiveness as the set of institutions,
Economic Complexity Index 0 -2 productivity of a country. Because the rates of return are
policies, and factors that determine the level of

the fundamental drivers of the growth rates of the
economy, a more competitive economy is one that is
likely to grow faster in the medium to long run.”
(global competitiveness report 2010. chapter 1.1, page 4)
-4
1960 1970 1980 1990 2000 2010 The GCI develops over 150 measures of elements that it
Year
considers important for competitiveness and then averages
them. The ECI looks, instead, at the actual kinds of industry
that a country can support. Both should capture informa-
tion that is relevant to an economy’s ability to grow. Which
one does so more effectively is an empirical question that
we address next.
FIGURE 4.6:
Since we only have data for the GCI rankings, and not the
Evolution of the GDP per capita of Thailand and Ghana as a function of time.
underlying value of the index, we do the analysis using the
rankings of the Economic Complexity Index instead of its
2500 2000 Ghana Thailand value. This allows for a fairer comparison. We do compari-
GDP per capita (constant 2000 US$) 1500 1000 that the GCI rankings contribute significantly less to the
sons using 5 and 10 year panels starting in 1979 and find

variance of economic growth than the ECI (see Technical Box
4.3 and Figure 4.9).
We conclude that the Economic Complexity Index can ac-
count for a significant fraction of the cross-country varia-

the ECI is a much stronger predictor of growth than other
commonly used indicators that measure human capital,
0 500 tion in income per capita and economic growth, and that
1960 1970 1980 1990 2000 2010 governance or competitiveness.
Year