A research study has been conducted by Malik Mehdiyev, Head of the Macroeconomic Policy and Regulation Department of the Economic Scientific Research Institute under the Ministry of Economy of the Republic of Azerbaijan, along with chief researcher Rauf Musayev and specialist Ahmad Ali. The study, carried out within the framework of the Economic Complexity Concept, is based on the methodology proposed by Harvard's Growth Lab and enables an in-depth analysis of countries' industrial potential and economic development prospects.
The economic complexity approach presented by Harvard's Growth Lab serves as a significant tool for countries in long-term economic planning and the development of industrial strategies. By utilizing this methodology, governments and economic researchers can conduct a more precise analysis of trade and industrial development, assess economic growth prospects, and implement economic policy decisions effectively based on scientific principles. The research study covers data from 232 countries and 5870 subgroups of products (classified under six-digit codes according to the Harmonized System of the foreign economic activity commodity nomenclature). This approach is used to address the following key questions for various economies:
Insights into the country's foreign trade turnover.
This question helps to understand the country's foreign trade structure and its position in international markets. Exported products reflect the country's industrial capabilities and technological level, while imported products indicate which sectors of domestic production are weak and where investment is necessary.
The dynamics of foreign trade turnover.
The analysis of trade dynamics allows for the assessment of the success of a country's economic policy and the level of its integration into international markets.
Key factors of export growth.
Factors determining export growth include technological development, infrastructure improvements, attracting investments, increasing labor productivity, and government industrial policies. This approach analyzes the complexity level of exported products to identify the factors ensuring sustainable export growth.
The potential and likelihood of the emergence of new industrial sectors.
The Economic Complexity Methodology allows for the analysis of countries' existing industrial capabilities and production networks, enabling the prediction of which new sectors could develop.
The likelihood of certain industrial sectors disappearing.
Some industries may lose their competitiveness over time or decrease in significance due to technological advancements. This methodology allows for the analysis of how industrial sectors will evolve in the future, including the reasons behind the relocation of certain production areas to other countries or the decline in local production.
The GDP growth prospects based on the country's production capabilities over the next 5-10 years
The economic complexity approach estimates the potential growth of GDP based on the complexity of a country's industrial networks. Countries with more complex economies can develop new production sectors, produce innovative products, and accelerate GDP growth with higher-value export products.