Technology

Countries Ranked by Their Economic Complexity

Published

3 years ago

November 20, 2019

Nick Routley

global economic complexity ranking

Countries Ranked by Their Economic Complexity

In the past, the trade between nations was a much simpler matter to grasp. Commodities and a few finished goods moved between a handful of countries in a straightforward way.

Today, around 6,000 officially classified products pass through the world’s ports, and digital products and services zip across country lines creating an extra layer of difficulty in measuring economic activity.

To try to understand this enormous level of economic complexity, the team at Harvard’s Growth Lab have created the Country Complexity Ranking. Here’s a look at the top 50 countries in the ranking:

Rank	Country	Score	Top Export(s)
1	Japan	2.28	Cars, ICT (tech)
2	Switzerland	2.14	ICT, gold, packaged medicaments
3	South Korea	2.05	ICT, cars
4	Germany	2.02	Integrated circuits, ICT, cars
5	Singapore	1.81	ICT, cars
6	Czech Rep.	1.79	Cars, vehicle parts
7	Austria	1.71	ICT, tourism
8	Finland	1.69	ICT
9	Sweden	1.67	ICT
10	Hungary	1.64	ICT, cars
11	Slovenia	1.57	Cars, ICT
12	United States	1.47	ICT, tourism
13	Italy	1.42	ICT, tourism
14	United Kingdom	1.42	ICT, finance
15	Slovakia	1.41	Cars
16	France	1.40	ICT, tourism
17	Ireland	1.39	ICT
18	Israel	1.37	ICT, diamonds
19	China	1.30	Electronic equipment
20	Mexico	1.27	Cars
21	Poland	1.19	ICT
22	Denmark	1.18	Transport, ICT
23	Belgium	1.16	ICT
24	Romania	1.16	ICT, vehicle parts
25	Thailand	1.15	Tourism
26	Netherlands	1.04	ICT
27	Estonia	1.03	ICT, transport
28	Malaysia	0.95	Integrated circuits
29	Belarus	0.93	Refined oils, ICT
30	Croatia	0.92	Tourism, ICT
31	Lithuania	0.85	Transport, refined oils
32	Spain	0.85	Tourism, ICT
33	Philippines	0.75	Integrated circuits, ICT
34	Portugal	0.72	Tourism, ICT
35	Canada	0.69	Crude oil, cars, ICT
36	Bosnia and Herz.	0.65	Tourism, ICT
37	Serbia	0.65	ICT
38	Turkey	0.65	Tourism, transport
39	Latvia	0.64	Transport, ICT
40	Bulgaria	0.62	Tourism, ICT
41	Norway	0.56	Crude oil, petrol. gases
42	Ukraine	0.42	ICT, transport
43	Cyprus	0.38	Tourism, transport
44	Tunisia	0.34	Electrical wire, tourism
45	India	0.32	ICT
46	Costa Rica	0.30	ICT, tourism
47	Uruguay	0.29	Tourism, wood pulp
48	Brazil	0.24	Soya beans, iron ore
49	Russia	0.24	Crude oil, refined oils
50	Lebanon	0.24	Tourism, ICT

Source

Japan, Switzerland, and South Korea sit at the top of the ranking.

Czech Republic – which was recently ranked as the most attractive manufacturing destination in Europe – has a strong showing, ranking 6th in the world. The United States slipped out of the top 10 into 12th position.

The Power of Productive Knowledge

Highly ranked countries tend to have the following attributes:

In short, the ranking hinges on the concept of “productive knowledge” – or the tacit ability to produce a product.

Muhammed Yildirim, of Harvard University, has thought up a useful analogy for thinking about the role of productive knowledge in the complexity of an economy:

“Suppose that each type of productive knowledge is a letter and each product is a word composed of these letters. Like the game of Scrabble, each country holds a set of letters with plenty of copies of each letter and tries to make words out of these letters. For instance, with letters like A, C and T, one can construct words like CAT or ACT. Then our problem of measuring economic complexity resembles interpreting how many different letters there are in each country’s portfolio. Some letters, like A and E, go in many words, whereas other letters, like X and Q, are used in very few. Extending this analogy to the countries and products, only those with a larger diversity of letters will be able to make more and more unique products. On the other hand, words that require more letters will be made only in the countries that have all the requisite pieces.”

complexity scrabble analogy

Not All Exports are Created Equal

Much like the rack of letters in a Scrabble game, the elements of every export-driven economy can be broken down and quantified. The resulting categories encompass everything from rendered pig fat to integrated circuits, each contributing to the country’s overall score.

complexity connectiveness by sector

Agricultural and extractive industries tend to score lower on the complexity scale. Machinery can be highly complex to produce and is connected to many facets of the global economy.

Visualizing this overall mix of categories can provide a unique perspective beyond big picture numbers like GDP. Below are a few real world examples of export markets on both ends of the complexity spectrum.

Japan

Since this ranking began in the mid-1990s, Japan has never been bumped from the top spot.

Due to a restricted land mass and some ingenuity, Japan has become the prototypical example of a low-ubiquity, high-sophistication export economy.

japan economic complexity breakdown

Interactive breakdown

⁨Cars and electronics are obvious standouts, but there numerous other high-value product categories in the mix as well. The country also has a wide variety of high value exports and trading partners, lowering the risk of a trade war or industry downturn crippling the country’s economy.

Australia

Many will be surprised to learn that Australia sits in the lower third of this complexity ranking.

Although Australia’s global ranking is high in a myriad of categories – household wealth per person, for example – its economic complexity score is -0.60, much lower than expected for its income level. Looking at the breakdown below, there are clues as to why this might be the case.

australia economic complexity breakdown

Interactive breakdown

Australia’s⁩ largest exports are in ⁨low⁩ complexity categories, such as minerals and agriculture. To compound matters, the country’s economy is heavily linked to China’s. To underscore this point, a recent study found that a 5% drop in China’s GDP would result in a 2.5% dip in Australia’s.

Venezuela

It’s no secret that Venezuela has seen some tough times in recent years. The chart below shows just how reliant Venezuela was on oil exports to sustain its economy.

venezuela economic complexity breakdown

Interactive breakdown

An over-reliance on a single export can leave a country extremely vulnerable in the event of price volatility or geopolitical events. In the case of Venezuela, three quarters of their export economy was comprised of crude oil – one of the lowest scoring product categories in the ranking.

The Rush to Diversify

A low level of economic complexity isn’t necessarily a problem. Many countries with middle-to-low scores in the ranking have great standards of living and a high level of wealth. Countries like Canada, Norway, and Australia were all well down the list.

On the other hand, some countries have made diversification a priority. SoftBank’s $100 billion Vision Fund is partially the result of Saudi Arabia’s push to develop a diversified, knowledge-based economy. Other oil-rich nations, such as Kazakhstan, are also pushing to diversify in the face of the world’s evolving energy mix.

As world economies evolve and the shift from fossil fuels continues, we will likely see economic complexity increase across the board.

Related Topics:exports economic complexity export economies complexity ranking

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How Big Tech Revenue and Profit Breaks Down, by Company

How do the big tech giants make their money? This series of graphics shows a breakdown of big tech revenue, using Q2 2022 income statements.

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In the media and public discourse, companies like Alphabet, Apple, and Microsoft are often lumped together into the same “Big Tech” category. After all, they constitute the world’s largest companies by market capitalization.

And because of this, it’s easy to assume they’re in direct competition with each other, fiercely battling for a bigger piece of the “Big Tech” pie. But while there is certainly competition between the world’s tech giants, it’s a lot less drastic than you might imagine.

This is apparent when you look into their various revenue streams, and this series of graphics by Truman Du provides a revenue breakdown of Alphabet, Amazon, Apple, and Microsoft.

How Big Tech Companies Generate Revenue

So how does each big tech firm make money? Let’s explore using data from each company’s June 2022 quarterly income statements.

Alphabet

breakdown of Alphabet's revenue streams and profit

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In Q2 2022, about 72% of Alphabet’s revenue came from search advertising. This makes sense considering Google and YouTube get a lot of eyeballs. Google dominates the search market—about 90% of all internet searches are done on Google platforms.

Amazon

breakdown of amazon's revenue streams and profit

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Perhaps unsurprisingly, Amazon’s biggest revenue driver is e-commerce. However, as the graphic above shows, the costs of e-commerce are so steep, that it actually reported a net loss in Q2 2022.

As it often is, Amazon Web Services (AWS) was the company’s main profit-earner this quarter.

Apple

breakdown of Apple's revenue streams and profit

View the full-size infographic

Apple’s biggest revenue driver is consumer electronics sales, particularly from the iPhone which accounts for nearly half of overall revenue. iPhones are particularly popular in the U.S., where they make up around 50% of smartphone sales across the country.

Besides devices, services like Apple Music, Apple Pay, and Apple TV+ also generate revenue for the company. But in Q2 2022, Apple’s services branch accounted for only 24% of the company’s overall revenue.

Microsoft

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Microsoft has a fairly even split between its various revenue sources, but similarly to Amazon its biggest revenue driver is its cloud services platform, Azure.

After AWS, Azure is the second largest cloud server in the world, capturing 21% of the global cloud infrastructure market.

Technology

Animation: The Most Popular Websites by Web Traffic (1993-2022)

This video shows the evolution of the internet, highlighting the most popular websites from 1993 until 2022.

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ranking websites by page views 1993-2022

The Most Popular Websites Since 1993

Over the last three decades, the internet has grown at a mind-bending pace.

In 1993, there were fewer than 200 websites available on the World Wide Web. Fast forward to 2022, and that figure has grown to 2 billion.

This animated graphic by James Eagle provides a historical look at the evolution of the internet, showing the most popular websites over the years from 1993 to 2022.

The 90s to Early 2000s: Dial-Up Internet

It was possible to go on the proto-internet as early as the 1970s, but the more user-centric and widely accessible version we think of today didn’t really materialize until the early 1990s using dial-up modems.

Dial-up gave users access to the web through a modem that was connected to an active telephone line. There were several different portals in the 1990s for internet use, such as Prodigy and CompuServe, but AOL quickly became the most popular.

AOL held its top spot as the most visited website for nearly a decade. By June 2000, the online portal was getting over 400 million monthly visits. For context, there were about 413 million internet users around the world at that time.

Rank	Website	Monthly Visits (May 2000)
1	AOL	400,891,812
2	Yahoo	387,573,587
3	MSN	354,239,803
4	eBay	116,101,785
5	Lycos	116,064,930

But when broadband internet hit the market and made dial-up obsolete, AOL lost its footing, and a new website took the top spot—Yahoo.

The Mid 2000s: Yahoo vs. Google

Founded in 1994, Yahoo started off as a web directory that was originally called “Jerry and David’s Guide to the World Wide Web.”

When the company started to pick up steam, its name changed to Yahoo, which became a backronym that stands for “Yet Another Hierarchical Officious Oracle.”

Yahoo grew fast and by the early 2000s, it became the most popular website on the internet. It held its top spot for several years—by April 2004, Yahoo was receiving 5.6 billion monthly visits.

Rank	Website	Monthly Visits (April 2004)
1	Yahoo	5,658,032,268
2	MSN	1,838,700,057
3	Google	1,318,276,780
4	AOL	905,009,947
5	eBay	805,474,705

But Google was close on its heels. Founded in 1998, Google started out as a simpler and more efficient search engine, and the website quickly gained traction.

Funny enough, Google was actually Yahoo’s default search engine in the early 2000s until Yahoo dropped Google so it could use its own search engine technology in 2004.

For the next few years, Google and Yahoo competed fiercely, and both names took turns at the top of the most popular websites list. Then, in the 2010s, Yahoo’s trajectory started to head south after a series of missed opportunities and unsuccessful moves.

This cemented Google’s place at the top, and the website is still the most popular website as of January 2022.

The Late 2000s, Early 2010s: Social Media Enters the Chat

While Google has held its spot at the top for nearly two decades, it’s worth highlighting the emergence of social media platforms like YouTube and Facebook.

YouTube and Facebook certainly weren’t the first social media platforms to gain traction. MySpace had a successful run back in 2007—at one point, it was the third most popular website on the World Wide Web.

Rank	Website	Monthly Visits (Jan 2007)
1	Google	7,349,521,929
2	Yahoo	5,169,762,311
3	MySpace	1,276,515,128
4	MSN	1,259,467,102
5	eBay	957,928,554

But YouTube and Facebook marked a new era for social media platforms, partly because of their impeccable timing. Both platforms entered the scene around the same time that smartphone innovations were turning the mobile phone industry on its head. The iPhone’s design, and the introduction of the App store in 2008, made it easier than ever to access the internet via your mobile device.

As of January 2022, YouTube and Facebook are still the second and third most visited websites on the internet.

The 2020s: Google is Now Synonymous With the Internet

Google is the leading search engine by far, making up about 90% of all web, mobile, and in-app searches.

What will the most popular websites be in a few years? Will Google continue to hold the top spot? There are no signs of the internet giant slowing down anytime soon, but if history has taught us anything, it’s that things change. And no one should get too comfortable at the top.