Indicators of product sophistication and factor intensities: Measurement matters

Stephan Huber and Stephan Huber (stephan.huber@wiwi.uni-regensburg.de)
Additional contact information
Stephan Huber: University of Regensburg, Postal: Universitätsstr. 31, 93053 Regensburg, Germany
Stephan Huber: University of Trier, Postal: Trier, Germany
Authors registered in the RePEc Author Service: Stephan Huber

Journal of Economic and Social Measurement, 2017, issue 1, 27-65

Abstract: The widely used PRODY indicator by Hausmann et al. [1] [What you Export Matters; Journal of Economic Growth: 12, 1–25] allows the calculation of product sophistication and factor intensities at high levels of disaggregation. In this paper I deal with its measurement, its conceptional limitations, its sensitivity to subjective decision making, its alternatives, and how to reap the best possible benefit from its usage. I introduce a theory-based alternative and investigate the sensitivity of empirical results with respect to different measurements. In particular, I re-estimate the main results of Hausmann et al. [1] with 75 variants of measurement. Small changes to the sample, the aggregation level, or the construction of the indicator can make a difference. Moreover, I offer two STATA programs that ease the calculation of various PRODY variants.

Keywords: Product sophistication; PRODY; EXPY; factor intensities; disaggregated bilateral trade; economic development (search for similar items in EconPapers)
JEL-codes: A13 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (5)

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Chapter: Indicators of Product Sophistication and Factor Intensities: Measurement Matters (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:iosjes:0066

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