The online Atlas of Economic Complexity is now interactive, allowing users to choose and combine a large number of variables related to imports, exports, date and country. In the webpage’s own words, it is “a powerful interactive tool that enables users to visualize a country’s total trade, track how these dynamics change over time and explore growth opportunities for more than a hundred countries worldwide.”
What is economic complexity?
A country with a high Economic Complexity has a wide range of complex knowledge capabilities related to productive enterprises. Its economy is likely to produce sophisticated products that require a very wide and diverse set of knowledge capabilities. For example, relatively few countries have the capabilities to produce highly complex chemicals or pharmaceuticals, since their production requires very specialized equipment and very precise measuring instruments. Equally, very few countries have nuclear power stations or space stations, since they lack the range of knowledge capabilities needed to build them. At the other end, a very large number of countries have far less complex economies that are capable of producing simple products (basic foods, mineral ores, lumber, garments, shoes, glass, kitchen utensils, furniture) but not products involving more complicated processes or technology
We first discussed the Atlas in 2012 in How “complex” is the Mexican economy?, when we noted that the Atlas ranked Mexico’s Economic Complexity Index (ECI) as #20 of the 128 countries studied. The interactive nature of the online Atlas has added the opportunity to explore many more trends in trade, generating a range of related, visually-appealing infographics.
In particular, choosing Mexico as the country, the Atlas can answer questions such as:
- What does Mexico import and export?
- How has Mexico’s trade evolved over time?
- What are the drivers of Mexico’s export growth?
- Which new industries are likely to emerge in Mexico? Which are likely to disappear?
- What are the GDP growth prospects of Mexico over the next 5-10 years, based on its productive capabilities?
Playing with the variables and dates in the Atlas is a really interesting way to explore just how Mexico’s exports and imports have changed over the years. For example, compare these infographics for Mexico’s exports in 1964 and 2010 respectively:
Mexico’s exports in 1964
Mexico’s exports in 2010
It is sometimes hard to imagine just how much Mexico has changed in the past fifty years! Overall, at rank #20, Mexico turns out to have an unusually high Economic Complexity Index given its income level. (All the other countries in the top 20 have significantly higher incomes than Mexico).
According to the Atlas, during the rest of this decade Mexico’s GDP should grow relatively rapidly, bringing its GDP rank more in line with its Economic Complexity Index. In general, analyses in the Atlas indicate that during the last few decades countries with higher than expected ECIs compared to their income levels experience more rapid economic growth.
Note, though, that while this relationship is empirically true, it does not explicitly include other factors thought to be important to economic growth such as governance and institutional quality, corruption, political stability, measures of human capital and competitiveness indicators.
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2 Responses to “Trends in Mexico’s foreign trade and Economic Complexity”
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Fascinating …. and perhaps very misleading … as your “Note, though,…” sentence implies.
Mexico is assembling complexity but not designing, developing or patenting much complexity.
Undergraduate engineers from Mexico’s universities rarely have oil or silicon under their finger nails and appear more suited to over supervising insufficiently educated workers than creating and owning innovation.
Actually, I think this is gradually changing (for the better) and more Mexican engineers are now involved in R&D, though I entirely agree that Mexico has a lot of catching up to do to compete in terms of innovation and design complexity on the world stage.