Picturing economic complexity

People often talk about the greater complexity of modern economies in a descriptive sense. Underlying this is the increased diversity of types of goods and services produced in an economy, and the increasing specialization of production.

Some economists, a growing number perhaps, are using formal complexity models to simulate the behaviour of the economy. I’ve always enjoyed looking at the online Observatory of Economic Complexity, where Ricardo Hausmann and Cesar Hidalgo and their colleagues measure complexity. They have been assembling statistics on the diversity of the production base of many economies, and on the trade, or links, between different national economies.

A physical version of theĀ [amazon_link id=”0262525429″ target=”_blank” ]Atlas of Economic Complexity[/amazon_link] arrived at the weekend and it’s tremendously interesting. “The secret of modernity is that we collectively use large volumes of knowledge, while each one of us only holds bits of it. Society functions because its members form webs that allow them to specialize and share their knowledge with others,” the introduction states. The Atlas measures complexity by counting the range of products countries can make.

Often online data sources are preferable because of the timeliness of their data; but the measurements of interest here will not vary quickly, and it is just as easy to page to a country of interest as to click through. This is a beautiful book, too. It will give me many happy hours of browsing.

[amazon_image id=”0262525429″ link=”true” target=”_blank” size=”medium” ]The Atlas of Economic Complexity: Mapping Paths to Prosperity[/amazon_image]