Economic Complexity is a measure of the amount of capabilities and knowhow that goes into the production of any given product. Products are vehicles for knowledge. To make a shirt, one needs to design it, make the fabric, cut it, sew it, pack it, brand it, market it and distribute it. For a country to produce shirts, it needs people who have expertise in each of these areas. Each of these tasks involves many more capabilities than any one person can master. Only by combining knowhow from different people can any one product be made.
How do countries accumulate productive knowhow they did not previously have? If the product is new it may require knowhow that nobody in the country possesses. If this involves too many different people, such a product may not be feasible. As a consequence, countries tend to move from the products they know how to make to others that are not too far away in terms of knowhow. The Product Space is a theoretical concept in which the distance between any two products is related to the distance in the capabilities required to make them. As a tool, it can help us determine which products require productive knowhow that is similar to the knowhow a country already possesses.
Using network science algorithms, The Product Space details nearly 800 products into 34 color-coded communities. The Atlas of Economic Complexity: Mapping Paths to Prosperity and The Atlas online present this set of maps for 128 countries illustrating where the economic opportunities for each country resides. More specifically, the Product Space is a visualization of the ‘capability distance’ between products. If a country makes one product, we estimate how easy it is to obtain the knowhow it will need in order to make another. The resulting space is the visualization of these connections between products based on the capabilities they share. Using the Product Space, we can predict the evolution of growth. [View related research]