The network structure of economic output

By Ricardo Hausmann, César A. Hidalgo. 2011

740 citations recorded by the source corpus.

Much of the analysis of economic growth has focused on the study of aggregate output. Here, we deviate from this tradition and look instead at the structure of output embodied in the network connecting countries to the products that they export. We characterize this network using four structural features: the negative relationship between the diversification of a country and the average ubiquity of its exports, and the non-normal distributions for product ubiquity, country diversification and product co-export. We model the structure of the network by assuming that products require a large number of non-tradable inputs, or capabilities, and that countries differ in the completeness of the set of capabilities they have. We solve the model assuming that the probability that a country has a capability and that a product requires a capability are constant and calibrate it to the data to find that it accounts well for all of the network features except for the heterogeneity in the distribution of country diversification. In the light of the model, this is evidence of a large heterogeneity in the distribution of capabilities across countries. Finally, we show that the model implies that the increase in diversification that is expected from the accumulation of a small number of capabilities is small for countries that have a few of them and large for those with many. This implies that the forces that help drive divergence in product diversity increase with the complexity of the global economy when capabilities travel poorly.

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Citations in the corpus

Export upgrading and growth: the prerequisite of domestic embeddedness (2013, background): “Recent empirical work has put structural transformation back to the forefront of the understanding of economic growth (Hausmann and Hidalgo, 2011).”
Revealed comparative advantage and the alternatives as measures of international specialization (2015, methodology): “Recently, an important literature on the link between the complexity of export structure and economic development (see for instance, Hidalgo et al. 2007; Hausmann and Hidalgo 2011) has used RCA as a central component in the related empirical analysis.”
Economic structure and environmental Kuznets curve hypothesis: new evidence from economic complexity (2020, background): “In other words, the economic complexity mirrors a country’s productive structure (Hausmann and Hidalgo 2011), which, in turn, leads to a specific pattern of energy consumption and, consequently, the environmental quality.”
Relatedness as driver of regional diversification: a research agenda (2017, unknown): “This is the case when the new export product is non-ubiquitous, which means there are only very few competitors in the same product (Hausmann & Hidalgo, 2011).”
Economic complexity, human capital and economic growth: empirical research based on cross-country panel data (2017, background): “Then the capabilities accumulation may enter the ‘Quiescence Trap’ (Hausmann and Hidalgo 2011).”
Climbing the Ladder of Technological Development (2017, unknown): “…structure oriented towards the production of more sophisticated and valuable goods (Lall 2000; Hidalgo et al., 2007; Hidalgo and Hausmann 2009; Hausmann and Hidalgo, 2011; Hausmann et al., 2007; Felipe, 2012) The paper is structured as follows: the next section presents the literature review…”
Economic Complexity and Environmental Performance: Evidence from a World Sample (2019, background): “In other words, the measure of economic complexity – which we define and explain in the Appendix A – quantifies a country’s productive structure taking into account the sophistication of the produced goods and capturing differences in industrial structures [1, 8, 18, 19, 28, 29, 29, 40, 54, 56–59, 1”
Toward understanding the impact of artificial intelligence on labor (2019, background): “We control for ubiquitous skills be normalizing raw skill importance across all occupations according to their revealed comparative advantage [1, 2, 3] (also known as location quotient [4, 5, 6]).”
Quantifying China's Regional Economic Complexity (2017, background): “The Economic Complexity Index (ECI) [18] is proposedbased on the intuition that, in our case, sophisticated economies are of high diversity (the number of industries one province has) and have industrieswith lowubiquity (the number of provinces with that industry), because only a few provinces can d”
Does Institutional Quality Foster Economic Complexity? (2019, unknown): “Investment in cost discoveries typically creates positive externalities because other entrepreneurs can emulate such discoveries to produce new products (Hausmann & Rodrik, 2003; Hausmann et al., 2007). However, Hausmann et al. (2007) highlight that an entrepreneur who participates in new economic a”