Export, the Italian lack of complexity

Export, the Italian lack of complexity

October 12, 2018

Andrea Dossena, Alessandra Lanza

The complexity indicators of world countries allow for the redefining of traditional measures on specialization, market shares, competitors and potential markets for Italy and other exporters. The analysis of the international markets of Prometeia MIO, enriched by this new set of indicators, will support the development of more powerful and targeted Business Intelligence tools

 

The analysis of the Economic Complexity indicator, based on export specializations of 70 major countries, has highlighted a great gap between Italy and top complexity countries as well as those with highest world trade shares, with the notable exception of China.

This result contradicts the great production heterogeneity and the variety of sectors in which Italy excels. In fact, among the over 5000 product codes of world trade, Italy is an exporter of over 4600 (Table 1), a value in line with that of the major world economies; furthermore, Italy presents a revealed comparative advantages in more than 1700 of these, second only to China and ahead of Germany.

 
Export, the Italian lack of complexity
 

The high value of the export flows in which Italy has comparative advantages (which accounts for more than 70% of total export) additionally underlines the apparent inconsistency between the economic complexity indicator and the strength of Italian export specializations (Figure 2).

 
Export, the Italian lack of complexity
 

If the number of competitive products and the value of their export do not explain Italian economic complexity, we have to look at the productive specialization structure of the country to find an answer.

 
Export, the Italian lack of complexity
 

The economic complexity calculation process provides a complexity ranking also at product level. Using this information, it is possible to explore the average complexity of the products exported by every country.

Looking at the tails of product complexity distribution (top and bottom 20%), it emerges that Italy and China export a significant amount of low complexity products and a relatively low proportion of high complexity ones, a composition very different from that of, for example, Switzerland and United Kingdom.

 
Export, the Italian lack of complexity
 

Fashion and agri-food present a very high percentage of low complexity products, whereas pharma, machinery and automotive are characterized by a large share of high complexity products.

The analysis confirms the richness of specializations of Italian industry, but also the lack of complexity of its structure of specialization. A profound change in the production spectrum should therefore represents a priority for the Italian industrial policies.


 
 
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