Please enable JavaScript.
Coggle requires JavaScript to display documents.
Lecture 6 - Navigating the product space: Identifying opportunities for…
Lecture 6 - Navigating the product space: Identifying opportunities for productive diversification
Know how exist in peoples brains and cannot be written in an email - it moves with people
if you need 10 letters and you have 6 there is no return of investment
international labor mobility, foreign direct investment and diasporas play a
key role
countries that export more stuff also export stuff that is less ubiquitous
Measuring economic Complexity
ECI
RCA country product = share of the product in country's exports / share of product in world exports
competitive exporter (over 1) means you are punching above your weight
this is how the global matrix becomes binary because over 1 competitive and under 1 not competitive in the industry
KC0 for diversity
Even if a product is not ubiquitus like diamonds the algorythm counts in that because other producs the country exports are ubiquitous thic product cant have a high PCI
then you have to standartize the ECI and PCI - PCI of 1 means the coutnry is 1 standrard deviation from the average
KP0 for ubiquity
PCI
Measures
Product complexity
Complexity Outlook Gain
how well positioned in the 'forest' a coutnry is
which nodes of the product space are occupated
if you have firms in all clusters it is easy co colonize a wideer range - good complexity outlook
if you have a few firms in a few clusters thats bad economic outlook
this explains the divergence
middle income coutnries have it easire to diversify but for low income coutnries its hard
1 more item...
(AKA Oppurtunity Gain)
Distance
“Proximity” (ɸ) measures how “close” two products are
“Distance” captures how “far” a country is from a product
i.e. how similar the country’s overall capabilities are to those the product requires
if you are in a cluster already and you calcilate te istance to a product thats alredy in the cluster the distance is near and if you are in the primary comodity market most products are very distance
If we have MCP Matric (who exports what) we can calculate
proximilty - distance between coutnries and producst
oppurtunity value
how much does you economic complexity improves if you diversify into another product (oil low simple eletronics high)
Criteria
co-location
if two products are produced in one city you can asssume they are technologically related
labour flows
correlation of occupational vector
coproduction at establishment
Definition
whats the probability that you export dresses given that you export textile and vice versa => you calculate that and thake the lower number
you take the minimum because thats usually the way of the less complex to the real complex - the right direction
around 90% technological proximity = if you make one you probably make both
aspargus and rockets have low probability
1 more item...
COMPLEXITY AND POLICY STRATEGY
if you wanna make more complex things those things are ususally further away from your possibility
you wanna diversify in the products that are at the frontier (line on the top left) where you gain the most complexity and the distance is reachible
