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[The index predicts US growth of about 2%, which is not enough to get us out of the mess, I think.]
Full report
http://atlas.media.mit.edu/
Economists at Harvard University and Massachusetts Institute of Technology have just released what they claim to be the crystal ball of economics: a model for predicting a nation’s future growth more accurately than any other techniques out there.
“The Atlas of Economic Complexity” ranks 128 nations based on their “productive knowledge” — the skills, experience and general know-how that a given population acquires in producing certain goods. Countries with a high score in the report’s “economic complexity index” have acquired years of knowledge in making a variety of products and goods and also have lots of room for growth. Essentially, the more collective knowledge a country has in producing goods, the richer it is — or will be.
The method, when applied to the years 1999-2009, proved to be much more accurate at predicting future growth than any other existing methods, including the World Economic Forum’s Global Competitiveness Index, according to the report.
http://blogs.wsj.com/economics/2011/...ogle_news_blog
After measuring the Economic Complexity Index (ECI) of 128 countries by analyzing their products, the researchers found a strong relationship between ECI and income per capita, at least for countries that have limited natural resource exports. (Countries with, for example, large oil reserves tend to be wealthier than expected, since mining oil reserves depends more on geology than large amounts of knowledge.) For the 75 countries for which natural resources account for less than 10% of exports, the researchers found that economic complexity accounts for 75% of the variance in income per capita. After controlling for natural resource exports, economic complexity and natural resources explain 73% of the variance in per capita income across all countries.
Using this data, the researchers generated a ranking of the 128 countries in which Japan had the highest ECI, followed by Germany and Switzerland. The US was 13th.
The authors then predicted each country’s future economic growth by comparing each country’s ECI with its level of income (GDP per capita). If a country had a lower level of income than was expected for its level of complexity, the researchers predicted that the country would experience more growth in order to “catch up.” In other countries, the level of income was higher than expected based on their level of complexity, suggesting that these countries would not experience strong future growth.
Based on this analysis, the top three countries with the highest expected growth were China, India, and Thailand. The US was 91st. As the researchers explained, complex economies tend to have few remaining opportunities because they already produce many complex products. Meanwhile, countries with an intermediate level of complexity differ largely in their potential for expanding to make more complex products.
http://www.physorg.com/news/2011-10-...knowledge.html
Full report
http://atlas.media.mit.edu/
Economists at Harvard University and Massachusetts Institute of Technology have just released what they claim to be the crystal ball of economics: a model for predicting a nation’s future growth more accurately than any other techniques out there.
“The Atlas of Economic Complexity” ranks 128 nations based on their “productive knowledge” — the skills, experience and general know-how that a given population acquires in producing certain goods. Countries with a high score in the report’s “economic complexity index” have acquired years of knowledge in making a variety of products and goods and also have lots of room for growth. Essentially, the more collective knowledge a country has in producing goods, the richer it is — or will be.
The method, when applied to the years 1999-2009, proved to be much more accurate at predicting future growth than any other existing methods, including the World Economic Forum’s Global Competitiveness Index, according to the report.
http://blogs.wsj.com/economics/2011/...ogle_news_blog
After measuring the Economic Complexity Index (ECI) of 128 countries by analyzing their products, the researchers found a strong relationship between ECI and income per capita, at least for countries that have limited natural resource exports. (Countries with, for example, large oil reserves tend to be wealthier than expected, since mining oil reserves depends more on geology than large amounts of knowledge.) For the 75 countries for which natural resources account for less than 10% of exports, the researchers found that economic complexity accounts for 75% of the variance in income per capita. After controlling for natural resource exports, economic complexity and natural resources explain 73% of the variance in per capita income across all countries.
Using this data, the researchers generated a ranking of the 128 countries in which Japan had the highest ECI, followed by Germany and Switzerland. The US was 13th.
The authors then predicted each country’s future economic growth by comparing each country’s ECI with its level of income (GDP per capita). If a country had a lower level of income than was expected for its level of complexity, the researchers predicted that the country would experience more growth in order to “catch up.” In other countries, the level of income was higher than expected based on their level of complexity, suggesting that these countries would not experience strong future growth.
Based on this analysis, the top three countries with the highest expected growth were China, India, and Thailand. The US was 91st. As the researchers explained, complex economies tend to have few remaining opportunities because they already produce many complex products. Meanwhile, countries with an intermediate level of complexity differ largely in their potential for expanding to make more complex products.
http://www.physorg.com/news/2011-10-...knowledge.html