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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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Data Visualization

Assembling the World Country-by-Country, Based on Economy Size

How does the world map change if it gets assembled based on the size of economies, in ascending order of GDP or GDP per capita?

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If you had to sketch a world map, you’d probably start with a place that is familiar.

Perhaps you would begin by drawing your own continent, or maybe you’d focus on the specific borders of the country you live in. Then, you’d likely move to drawing the outlines of neighboring countries, eventually working your way to far and distant lands.

This would be a logical way for anyone to think about such a task, and it gives some insight as to how humans think about the world.

We start with what’s familiar, and build it out until it’s a complete picture.

Assembling the World by Economy Size

What if we assembled a world map in a completely different order?

Today’s two animations come to us from Engaging-Data, and they approach the world map from an alternate angle: assembling countries on the map in the order of their economic footprints.

GDP (Nominal)

The first map, shown below, uses nominal GDP to assemble countries in ascending order:

Country GDP

This version of the map shows the smallest economies first, with the larger economies at the end.

For this reason, the first economies appearing on the map tend to be developing nations, or nations with smaller geographical or demographic footprints.

For example, even though the Falkland Islands are wealthy on a per capita basis, the British Overseas Territory has fewer than 4,000 people, which gives it a minor footprint on a global stage.

GDP per Capita (Nominal)

Now, let’s take a look at the same map, constructed in order of GDP per capita:

Country GDP per Capita

This animation is more cohesive, given that it is not dependent on population size. Instead the order here is based on economic output (in nominal terms) of the average person in each country or jurisdiction.

In this case, developing nations appear first – and at the end, more developed regions (like Europe and North America) tend to fill out.

Note: All rankings here are in nominal terms, which use market rates to calculate comparable values in U.S. dollars, while omitting the cost of living as a factor. GDP rankings change significantly when using PPP rates.

Other Ways to Assemble the World

While assembling nations based on GDP provides an interesting way to look at the world, this same approach can be tried by applying other statistics as well.

We recommend checking out this page, which allows you to “assemble the world” based on measures like population density, life expectancy, or population.

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Chart of the Week

Visualizing Africa’s Free Trade Ambitions

The Gambia recently became the latest country to ratify the African Continental Free Trade Area (AfCFTA), helping the landmark agreement reach critical mass to move forward.

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africa free trade

Visualizing Africa’s Free Trade Ambitions

A united African continent working towards common goals would be a major force on the global economic stage.

To this end, nations in the region have been working towards an ambitious plan to create the world’s largest trade area. The Gambia recently became the latest country to ratify the African Continental Free Trade Area (AfCFTA), helping the agreement reach critical mass to move forward.

Today’s graphic helps put the region – and the status of AfCFTA – into perspective.

The Patchwork Problem

One key to unlocking the region’s economic potential is making it easier for Africa’s 55 countries to trade with one another.

Currently, Africa is a patchwork of regulations and tariffs, and trade between countries has suffered as a result. For example, only 10% of Nigeria’s annual trade activity is with other African countries. This is a surprising given the country’s dominant economic standing and location firmly in the center of the continent.

As a whole, Africa’s intra-continental trade level hovers at just around 20%, while nations in Europe and Asia are at 69% and 59%, respectively. Clearly, there is a lot of room for growth.

What is AfCFTA?

AfCFTA is the biggest free trade agreement since the establishment of the World Trade Organization.

The objective of the agreement is to create a single continental market for goods and services, with free movement of business people and investments.

Last year, 44 African leaders signed an agreement to ratify AfCFTA, with half that number needed to move the agreement forward. Earlier this week, The Gambia was the 22nd country to announce that its government has ratified the agreement, meeting the threshold to officially put the wheels in motion.

We have witnessed a historic moment for the African Continent. AfCFTA is now set to become operational within
the month, creating a single continental market for goods
and services.

– Mark-Anthony Johnson, CEO, JIC Holdings

The good news for the agreement is that many of Africa’s largest economies – including Egypt and South Africa – are already on board. There is, however, one significant holdout.

The Elephant in the Room

Even though the threshold for pushing AfCFTA forward has been reached, Nigeria’s lack of commitment is still a major blow to the strength and credibility of the agreement.

Nigeria’s situation is complicated. The country’s economic prospects are bright, and Lagos is on a trajectory to become the world’s largest city over the next few decades. On the other hand, there is fierce opposition from labor unions, and the country is home to largest concentration of people living in extreme poverty in the world.

[AfCFTA is] an extremely dangerous and radioactive
neo-liberal policy initiative.

– Ayuba Wabba, President of NLC, Nigeria’s largest labor union

While the majority of African nations appear to be on board with the plan to enact AfCFTA, it remains to be seen whether Nigeria comes along for the ride or decides to go it alone.

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