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Can the Method of Reflections help predict future growth?

Guzmán Ourens ()

No 2013008, Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: Building upon an original and fruitful research line, a recent paper by Hidalgo and Hausmann (2009) proposed new indicators of product sophistication and economic complexity constructed solely upon international trade data, in their Method of Reflections. The authors find their indicators for economic complexity to be highly related to countries' income and show evidence supporting their use as predictors of future growth in the short and long run. This would make these indicators very appealing to empirical economists and policy-makers. This work tests these properties for the indicators constructing them upon a more disaggregated database and changing some other important methodological decisions. Results show that MR indicators are strongly related to income and they can be considered good predictors of long-term growth under certain conditions. Evidence supporting MR indicators as good predictors of short-term growth could not be found.

Keywords: Method of reflections; specialization; growth; economic complexity (search for similar items in EconPapers)
JEL-codes: O47 O33 F14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fdg
Date: 2013-03-26
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Related works:
Working Paper: Can the Method of Re?ections help predict future growth? (2012) Downloads
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