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Which Countries Have the Most Economic Complexity?

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Every country has an economy that is unique.

In some places, such as the United States or Germany, economies are able to produce many different goods and services that get exported around the world. These countries tend to house world-class businesses in sectors like financials, technology, consumer goods, and healthcare, with companies that produce highly specialized goods like automobiles, software, or pharmaceutical products. Ultimately, these are innovative economies that can roll with the punches, creating growth even when prospects are dim.

In other places, this level of sophistication is just not there. Innovation and knowledge are stunted or non-existent for most industries, and these countries may focus exclusively on one or two goods to pay the bills. Venezuela’s reliance on oil is an obvious example of this, but there are even many Western countries that miss the mark here as well.

Measuring Economic Complexity

In 2009, a team at Harvard formalized a measure of economic complexity that compared nations based on the sophistication of their economies. Now known as the Economic Complexity Index (ECI), the exact measurement is complicated, but it essentially uses data on two main things to uncover the underlying level of economic complexity:

1. Economic Diversity
Measures how many different products a country can produce.

2. Economic Ubiquity
Measures how many countries are able to make those products.

In other words: if a country produces only a few goods, that economy is not very complex. Further, if a country produces many different products, but they are all simple ones that can be replicated elsewhere, the economy is still not complex. See full details on the project here.

Ranking the Most Complex Economies

Here are the most complex economies in order, along with the changing rankings over time:

As you’ll notice, the most recent set of data is from 2015.

Topping the list are the economies of Japan (1st), Switzerland (2nd), Germany (3rd), and South Korea (4th). The United States sits in 9th place, and Canada is further down at 33rd.

Australia, which relies heavily on commodities, ranks notably low for Western countries in 73rd place, where it is sandwiched between Kazakhstan and the Dominican Republic.

Movers and Shakers

The most recent iteration of the index also highlighted some movers and shakers over the last 10 year period:

Largest Falls in Economic Complexity

In particular, the crisis in Venezuela has had an effect on economic complexity, eroding any sophistication that existed.

Meanwhile, Cuba’s economy is also in the decline in terms of sophistication – and with major exports including raw sugar (27%), rolled tobacco (15%), nickel (12%), oil (11%), hard liquor (7%), and crustaceans (4%), it’s not hard to see why.

Largest Wins in Economic Complexity

On the opposite side of the spectrum, the Philippines is the biggest mover upwards, ascending 28 spots.

Some African countries are also moving fast up the rankings: Botswana, Malawi, Uganda, and Cameroon each jumped over 20 spots.

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Markets

CBD Oil vs. Hemp Oil: What’s the Difference?

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CBD Oil vs. Hemp Oil: What’s the Difference?

For many consumers, cannabis plays a significant role in the treatment of medical conditions and managing general well-being. As a result, certain products have seen a rapid increase in popularity in recent years.

But while awareness of these products is at an all-time high, false or misleading information continues to cause confusion, and creates an unnecessary barrier for consumers who want to experiment with, or try different products.

For example, 69% of cannabidiol (CBD) products are reported to have inaccurate labeling, so it’s no surprise that some consumers are uncertain about the suitability of these products and are hesitant to invest.

Today’s graphic from Elements of Green dives into the differences between popular cannabis products, CBD oil and hemp seed oil—more commonly known as hemp oil— and the common misconceptions that are inhibiting consumers from entering the space en masse.

Same Plant, Difference Characteristics

Typically, both CBD oil and hemp oil originate from the hemp plant, a non-psychoactive cannabis plant. Therefore, it typically does not result in any intoxicating effects. However, many consumers mistakenly believe that CBD or hemp products will get them high, when in fact it is the marijuana plant—hemp’s psychoactive cousin—that can induce mind-altering effects.

Even though both oils are extracted from the same plant, they each have very different characteristics and uses that consumers should be aware of.

CBD Oil

CBD oil is extracted from the flowers, leaves, stems, and stalks of hemp plants, and contains high levels of the naturally occurring CBD compound. Various CBD oil formats include tinctures, vape oil, and capsules, which are commonly used for their proven therapeutic benefits, such as:

  • Pain management
  • Relaxation
  • Stress relief
  • Treatment of medical conditions such as epilepsy, schizophrenia, multiple sclerosis, and arthritis
  • Reduction in anxiety
  • Sleep aid

When it comes to product labeling, consumers should be aware that different types of CBD oils exist, depending on the chemical compounds—known as cannabinoids—they contain.

  • CBD Isolate: Pure CBD, with no other cannabinoids such as THC
  • Full-spectrum CBD oil: Contains CBD among other cannabinoids, with no THC
  • Broad-spectrum CBD oil: Contains CBD among other cannabinoids including low levels of THC

These oils are used in a wide variety of consumer products such as beverages, beauty products, and even pet food.

Hemp Oil

Hemp oil, on the other hand, is extracted from hemp seeds and contains no cannabinoids such as CBD and THC. It is used more like a traditional cooking oil, but can also be found in topical creams and lotions.

More recently, hemp oil is being hailed for its use in industrial products such as concrete, bio-plastics and fuel. While it has huge potential for use in both consumer and industrial products, its benefits differ slightly to CBD oil:

  • Source of plant-based protein and rich in fatty acids and antioxidants
  • Reduces inflammation
  • Reduces severity of skin conditions such as acne, eczema, or psoriasis
  • Anti-bacterial properties
  • Could reduce PMS or menopause symptoms

Consumers should ensure that hemp oil is listed as the active ingredient on the product’s packaging, but it may also be listed as cannabis sativa seed oil.

Busting the Myths

While there is strong scientific evidence to support the efficacy of CBD oil and hemp oil, companies need to commit to both appropriate and safe labeling regarding dosage levels and ingredients.

Following that, previously held stigmas and misconceptions should slowly disintegrate as these products become more widely available and consumers increase their knowledge and understanding of their benefits.

Considering that the popularity of cannabis consumer products has only exploded over the last decade, initial confusion surrounding them is to be expected, and the true potential of these products is yet to be realised.

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Technology

Visualizing the Size of Amazon, the World’s Most Valuable Retailer

Amazon’s valuation has grown by 2,830% over the last decade, and the tech giant is now worth more than the other 9 largest U.S. retailers, combined.

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Visualizing the Size of the World’s Most Valuable Retailer

As brick-and-mortar chains teeter in the face of the pandemic, Amazon continues to gain ground.

The retail juggernaut is valued at no less than $1.4 trillion—roughly four times what it was in late 2016 when its market cap hovered around $350 billion. Last year, the Jeff Bezos-led company shipped 2 billion packages around the world.

Today’s infographic shows how Amazon’s market cap alone is bigger than the nine biggest U.S. retailers put together, highlighting the palpable presence of the once modest online bookstore.

The New Normal

COVID-19’s sudden shift has rendered many retail outfits obsolete.

Neiman Marcus, JCPenney, and J.Crew have all filed for bankruptcy as consumer spending has migrated online. This, coupled with heavy debt loads across many retail chains, is only compounding the demise of brick-and-mortar. In fact, one estimate projects that at least 25,000 U.S. stores will fold over the next year.

Still, as safety and supply chain challenges mount—with COVID-19 related costs in the billions—Amazon remains at the top. It surpasses its next closest competitor, Walmart, by $1 trillion in market valuation.

How does Amazon compare to the largest retailers in the U.S.?

10 Largest Public US Retailers*Market Value July 1, 2020Market Value July 1, 2010 Normalized % Change 2010-2020Retail Revenue
Walmart$339B$179B90%$514B
Costco$134B$24B458%$142B
Amazon$1,400B$50B2,830%$140B
The Kroger Co.$26B$13B107%$118Be
Walgreens Boots Alliance$36B$26B38%$111B
The Home Depot$267B$47B466%$108B
CVS$84B$40B112%$84B
Target$60B$37B64%$74B
Lowe's$102B$29B251%$71B
Best Buy$23B$14B59%$43B
Combined value of retailers (without Amazon)$1,071B

Source: Deloitte, YCharts
*Largest public US retailers based on their retail revenue as of fiscal years ending through June 30, 2019, e=estimated

With nearly a 39% share of U.S. e-commerce retail sales, Amazon’s market cap has grown 2,830% over the last decade. Its business model, which aggressively pursues market dominance instead of focusing on short-term profits, is one factor behinds the rise.

By the same token, one recent estimate by The Economist pegged Amazon’s retail operating margins at -1% last year. Another analyst has suggested that the company purposefully sells retail goods at a loss.

How Amazon makes up for this operating shortfall is through its cash-generating cloud service, Amazon Web Services (AWS), and through a collection of diversified enterprise-focused services. AWS, with estimated operating margins of 26%, brought in $9.2 billion in profits in 2019—more than half of Amazon’s total.

Amazon’s Basket of Eggs

Unlike many of its retail competitors, Amazon has rapidly diversified its acquisitions since it originated in 1994.

Take the $1.2 billion acquisition of Zoox. Amazon plans to operate self-driving taxi fleets, all of which are designed without steering wheels. It is the company’s third largest since the $13.7 billion acquisition of organic grocer Whole Foods, followed by Zappos.

Accounting for the lion’s share of Amazon-owned physical stores, Whole Foods has 508 stores across the U.S., UK, and Canada. While Amazon doesn’t outline revenues across its physical retail segments—which include Amazon Books stores, Amazon Go stores, and others—physical store sales tipped over $17 billion in 2019.

Meanwhile, Amazon also owns gaming streaming platform Twitch, which it acquired for $970 million in 2017. Currently, Twitch makes up 73% of the streaming market and brought in an estimated $300 million in ad revenues in 2019.

Carrying On

Despite the flood of online orders due to quarantines and social distancing requirements, Amazon’s bottom line has suffered. In the second quarter of 2020 alone, it is expected to rack up $4 billion in pandemic-related costs.

Yet, at the same time, its customer-obsessed business model appears to thrive under current market conditions. As of July 1, its stock price has spiked over 51% year-to-date. On an annualized basis, that’s roughly 100% in returns.

As margins get squeezed and expenses grow, is Amazon’s growth sustainable in the long-term? Or, are the company’s strategic acquisitions and revenue streams providing the catalysts (and cash) for only more short-term success?

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