Economic and Technological Complexity: A Model Study of Indicators of Knowledge-based Innovation Systems

TL;DR

This study develops a new 'Triple Helix' complexity index combining economic and technological indicators to analyze innovation systems, revealing limited correlation with income levels across countries.

Contribution

It introduces the Triple Helix Complexity Index (THCI) integrating economic and patent data to measure national innovation system complexity.

Findings

ECI, PatCI, and THCI are correlated among themselves.

Correlations between these indices and GDP per capita are weak.

Japan scores highest on all three complexity measures.

Abstract

The Economic Complexity Index (ECI; Hidalgo & Hausmann, 2009) measures the complexity of national economies in terms of product groups. Analogously to ECI, a Patent Complexity Index (PatCI) can be developed on the basis of a matrix of nations versus patent classes. Using linear algebra, the three dimensions: countries, product groups, and patent classes can be combined into a measure of "Triple Helix" complexity (THCI) including the trilateral interaction terms between knowledge production, wealth generation, and (national) control. THCI can be expected to capture the extent of systems integration between the global dynamics of markets (ECI) and technologies (PatCI) in each national system of innovation. We measure ECI, PatCI, and THCI during the period 2000-2014 for the 34 OECD member states, the BRICS countries, and a group of emerging and affiliated economies (Argentina, Hong Kong, Indonesia, Malaysia, Romania, and Singapore). The three complexity indicators are correlated between themselves; but the correlations with GDP per capita are virtually absent. Of the world's major economies, Japan scores highest on all three indicators, while China has been increasingly successful in combining economic and technological complexity. We could not reproduce the correlation between ECI and average income that has been central to the argument about the fruitfulness of the economic complexity approach.