Sunday, May 20, 2012

Observatory of Economic Complexity - Brilliant data visualisation

The Observatory of Economic Complexity by MIT is a brilliant display of data and its visualisation in the area of international trade. The Economic Complexity Observatory is a multidisciplinary effort between the Macro Connections group at the MIT Media Lab and the Center for International Development at Harvard University. The goal of the observatory is to develop new tools that can help visualize and make sense of large volumes of data that are relevant for macroeconomic development decision making. Explaining the rationale for this effort, it said:
"Ultimately, the complexity of an economy is related to the multiplicity of useful knowledge embedded in it. For a complex society to exist, and to sustain itself, people who know about design, marketing, finance, technology, human resource management, operations and trade law must be able to interact and combine their knowledge to make products. These same products cannot be made in societies that are missing parts of this capability set. Economic complexity, therefore, is expressed in the composition of a country’s productive output and reflects the structures that emerge to hold and combine knowledge."
I chanced upon it a few days ago and have been hooked ever since!

There is abundant literature on the impact of China on entering the WTO both on its internal economy as well as for the globalised economy. I tried to analyse some data relating to China in this Observatory and found the following results:

1. Percentage of exports from the US to China rose from 2.4% in 1995 (prior to China joining the WTO) to 3.3% in 2001 (when China joined the WTO) to 8.4% in 2010 (9 years after joining the WTO). US products have gradually found a place in Chinese markets over the last 10 years after China's accession tot he WTO.

2. Percentage of imports from China to the US rose from 20% in 1995 (prior to China joining the WTO) to 23% in 2001 (when China joined the WTO) and hovered around 20% in 2010 (9 years after joining the WTO).

3. China's exports of "Automated Data Processing machines" perhaps explains the increasing growth of the Chinese economy in the last 10 years. While Chinese exports of these products was only 2.6% of total exports of this product in 1995, it rose to 11% in 2001 and was at 52% in 2010. China has captured more than half the world share of exports in this sector. Could this be a direct result of its accession to the WTO in terms of accessing foreign markets with reduced trade barriers?

The Observatory of Economic Complexity is useful to understand, analyse and critically study the impact of globalisation on a country's development status. It is a very useful to tool for policy makers and trade experts to come to data linked decisions rather than decisions based on extraneous circumstances.


Urbanomics said...

very good one. did'nt know about this MIT lab

Srikar said...

Absolutely! Data analytics at it's best!