The Dynamics of Economic Complexity and the Product Space over a 42 year period

I'm in an economics reading group, and we are currently reading Jane Jacobs's The Economy of Cities (which I will forever think and pronounce in a British accent because of my professor), and our professor e-mailed this note to the lot of us along with these links:

___________________________________________

From: Professor
Date: 12 Feb 2010 08:50:57 -0500
Subject: Economics reading group - FYI
To: Group

Mainstream economics is catching up with Jane Jacobs!

I attach an article from last week's Economist.

http://www.chidalgo.com/Papers/HidalgoHausmann_PNAS_2009_PaperAndSM.pdf
http://www.chidalgo.com/Papers/HidalgoHausmann_DAI_2008.pdf
http://www.cid.harvard.edu/cidwp/189.html

Question: Which is more informative about what is going on--Jacobs's stories or the economists graphs and statistics?
___________________________________________

I think it's the graphs and statistics, btw. It's such a fascinating study... just even look at all the charts and complex diagrams... I'm impressed already. See, this is when math and statistics are cool, when you can draw some sort of macro conclusion from it. 

"In particular we identify Brazil, Indonesia, Turkey, Malaysia, Thailand, Korea, Singapore and China, as countries that transformed their productive structures considerably during these four decades, albeit following different trajectories."

So... like BRIC, but BITMTKSC. Haha. Sorry, horrid joke. Better to let the abstract speak for itself without inserting my useless pithy comments. See below.

___________________________________________

CID Working Paper No. 189, December 2009

The Dynamics of Economic Complexity and the Product Space over a 42 year period

César A. Hidalgo

Abstract

How does the productive structure of countries' changes over time? In this paper we explore this question by combining techniques of networks science with 42 years of trade data and find that, while the Product Space remains relatively stable during this period, the dynamics of countries' productive structures is characterized by a few highly dynamic economies. In particular we identify Brazil, Indonesia, Turkey, Malaysia, Thailand, Korea, Singapore and China, as countries that transformed their productive structures considerably during these four decades, albeit following different trajectories. For instance, the economic complexity of Korea, Singapore and China was relatively high at the beginning of the observation period and continued to increase during these forty two years, moving these countries into the top spots of the economic complexity rankings for the beginning of this millennium. Brazil, Indonesia and Turkey, on the other hand, transformed their productive structures significantly during the same period of time, but did so starting from a less sophisticated foundation. We conclude the paper by moving from this and other observations into the policy implications of this view of economic development and argue that the government involvement in the private sector should be to help catalyze market activities and solve coordination problems that emerge naturally when countries try to accumulate capabilities. This represents an alternative to more traditional views of the role of government that postulate, in their extremes, that the public sector should either have no involvement in private sector activities or, on the other hand, substantial ownership of the means of production.

Keywords: Economic Complexity, Capabilities, Networks, Product Space, Structural Transformation, Economic Development
___________________________________________