Global Economic Research Project

In the preface to the Atlas of Economic Complexity the Harvard and MIT joint authors (Hausmann, Hidalgo et al.) note that in the past two centuries, mankind has accomplished what earlier was unthinkable.

Looking  back at our long list of achievements, it is easy to focus on the most audacious of them, such as our conquest of the skies and the moon. Our lives, however, have been made easier and more prosperous by a large number of more modest, yet crucially important feats. Think of electric light bulbs, telephones, cars, personal computers, antibiotics, TV, refrigeration, watches and water heaters. These and many other  innovations benefit us despite our minimal awareness of them, such as advances in port management, electric power distribution, agrochemicals and water purification. This progress was possible because we got smarter. During the past two centuries, the amount of productive knowledge we hold expanded dramatically.

This was not, however, an individual phenomenon. It was a collective phenomenon. As individuals we are not much more capable than our ancestors, but as societies we have developed the ability to make all those items mentioned above – and much, much more.

Modern societies can amass large amounts of productive knowledge because they distribute bits and pieces of it among its many members. But to make use of it, this knowledge has to be put back together through organizations and markets. Thus, individual specialization begets diversity at the national and global level. Our most prosperous modern societies are wiser, not because their citizens are individually more intelligent, but because these societies hold a diversity of knowhow and because they are able to recombine it to create a larger variety of smarter and better products.

However, the social accumulation of productive knowledge has not been a universal phenomenon. It has taken place in some parts of the world, but not in others.  This phenomenon is evident in the emergence and self-organised development of dense electronics industry clusters in a very limited number of global regions including Silicon Valley, Cambridge UK, Austin TX and importantly for us, in Adelaide.

Where productive knowledge has accumulated, it has underpinned an incredible increase in living standards. Where it has not, living standards resemble those of centuries past. The enormous income gaps between rich and poor nations are an expression of the vast differences in productive knowledge amassed by different nations. These differences are expressed in the diversity and sophistication of the things that each of them makes, which are explored in detail in the Atlas of Economic Complexity.  See:  https://atlas.media.mit.edu/static/pdf/atlas/AtlasOfEconomicComplexity_Part_I.pdf

Next Month: The Hidden Value of the Electronics Industry to the Regional Economy of South Australia.