Jan 30, 2012

Harford on the Atlas of Economic Complexity

The economist Ricardo Hausmann and the network physicist César Hidalgo have been trying to measure this complexity, and I’ve written before about their work. They argue that economies are collections of “capabilities”, building blocks that can be put together like Lego to produce different products. A trustworthy post office is a building block; so is high-speed internet; so are functional bankruptcy courts; so is a literate workforce; so is a fast lane at customs for processing perishable foodstuffs. It’s not clear how one would go about measuring all of these capabilities. Instead, Hausmann and Hidalgo measure them indirectly, tracking the shadows that they cast upon a country’s trade statistics.
[See an old post] What I found interesting about Harford's article is that he includes "functional bankruptcy courts." This suggests that the Atlas also has elements of institutional complexity. Hausmann and Hidalgo have done a superb job mapping the economic capabilities of countries. I wonder what the next steps are: mapping the economic capabilities of regions? An Atlas of institutional complexity? An Atlas of cultural complexity? And probably mapping the dynamic evolution of these different maps together through time?   

No comments:

Post a Comment