Economic complexity results from the country’s level of knowledge and technological progress starting from the manufacturing phase to the exporting one. In a report on “The complexification of productive systems as a vector of economic transition in MENA and the role of short-term policies”, (FEM42-07) Femise introduces a geographical factor
The ability to manufacture products that are not designed elsewhere, research, innovation affect the competitiveness of a state, increase the production and export of goods with higher value added. “A country that has an advantage in terms of innovation and export of high-tech products is at the top of the economic complexity index,” says Femise as a prelude to its latest study.
Led by Nicolas Péridy, Michel Dimou and Myriam Ben Saad from the University of Toulon in collaboration with Ilham Haouas (University of Abu Dhabi) and Naceur Kraief (University of Sousse), the paper analyzes the complexification of productive systems in MENA countries. by integrating the geographical dimension. The authors add that the competitiveness of a country at the global level depends on what the country exports, not the quantity of what they are exporting.
Turkey: nuts, cotton and cars
“In 1984, Turkey started to export cotton and nuts to become today one of the leading exporter of cars, capital goods and textiles. This economy has been able to reorient its export basket towards more complex and growth-enhancing products. Since 2010, the Turkish workforce has become one of the most flexible and skilled labor forces in the world (…), “the document says. While Israel has the highest level of economic complexity index (ICE) among Southern Mediterranean countries, Tunisia saw its ECI deteriorate, which would explain, according to the Femise, the high unemployment rate.
The performance of neighboring countries is just as important as the economic complexity index, the export diversification and quality index and the manufacturing value added. According to the report’s authors, a sophisticated economy is a vehicle for economic transition and influences short-term policies.
“The economies furthest away from the” European core for example “are getting worse,” says Femise, while stressing the importance of transmission channels (bilateral and / or regional trade agreements, tariff and non-tariff barriers, clusters).
In order to help the Mediterranean countries to make their production system more complex, Femise recommends supporting the development of new and highly sophisticated products and targeting activities with training effects. “In particular, Tunisia and the United Arab Emirates should develop complex products such as machinery, industrial chemical and electrical clusters,” says Femise.
It calls on states to rapidly introduce training programs adapted to technological change while encouraging the development of innovative sectors.
Femise also suggests improving logistics performance, economic freedom, business environment, business partnerships with technologically advanced countries.
Read the entire Femise study here