The Economic Complexity Index (ECI) and output volatility: High vs. low income countries
Marthinus Breitenbach (),
Carolyn Chisadza and
Matthew Clance ()
The Journal of International Trade & Economic Development, 2022, vol. 31, issue 4, 566-580
In this study, we explore whether more complex economies are better shielded against exogenous shocks. We contribute to the literature on determinants of output volatility with a relatively new index on productive capabilities of export goods, the Economic Complexity Index (ECI), developed by Hausmann et al. [Hausmann, R., C. A. Hidalgo, S. Bustos, M. Coscia, A. Simoes, and M. A. Yildirim. 2014. The Atlas of Economic Complexity: Mapping Paths to Prosperity. MIT Press]. The ECI measures the productive capabilities of countries by explaining the knowledge accumulated in a population based on the goods produced and exported and to which countries they export. Therefore ECI captures diversification as well as the technology embedded in the products. Using panel data analysis for a cross section of countries from 1984 to 2016, we find variations in the effects of ECI on output volatility between high and low income countries. For high income countries, increases in ECI reduce output volatility in the short to medium term with a longer delay in output volatility moderation for low income countries. Findings suggest that low income countries have less diversified and less complex export goods which leave them open to external shocks and reduce their ability to adjust quickly to the shocks. Furthermore, disaggregation by regions reveals that economic complexity in Asia is relatively more effective at reducing output volatility than in Africa.
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
Working Paper: The Economic Complexity Index (ECI) and Output Volatility: High vs Low Income Countries (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:taf:jitecd:v:31:y:2022:i:4:p:566-580
Ordering information: This journal article can be ordered from
Access Statistics for this article
The Journal of International Trade & Economic Development is currently edited by Pasquale Sgro, David E.A. Giles and Charles van Marrewijk
More articles in The Journal of International Trade & Economic Development from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().