A Measure of Countries’ Distance to Frontier Based on Comparative Advantage

Ulrich Schetter

No 189, Growth Lab Working Papers from Harvard's Growth Lab

Abstract: This paper presents a structural ranking of countries by their distance to frontier. The ranking is based on comparative advantage. Hence, it reveals information on the productive capabilities of countries that is fundamentally different from GDP per capita. The ranking is centered on the assumption that countries’ capabilities across products are similar to those of other countries with comparable distance to frontier. It can be micro-founded using standard trade models. The estimation strategy provides a general, non-parametric approach to uncovering a log-supermodular structure from the data, and I use it to also derive a structural ranking of products by their complexity. The underlying theory provides a flexible micro-foundation for the Economic Complexity Index (Hidalgo and Hausmann, 2009).

Keywords: distance to frontier; economic complexity index; gravity model; log-supermodularity; monotonic eigenvector; product complexity ranking (search for similar items in EconPapers)
JEL-codes: F10 F14 O11 O47 (search for similar items in EconPapers)
Date: 2022-09
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Citations: View citations in EconPapers (1)

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Working Paper: A Measure of Countries’ Distance to Frontier Based on Comparative Advantage (2022)
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