Exploring the relationship between economic complexity and resource efficiency

Abstract

Improving resource efficiency (RE) is an important objective of the Sustainable Development Goals. In this study we find a strong exponential relationship between economic complexity index (ECI) and RE of countries. ECI measures the level of accumulated knowledge of a society enabling the products it makes. The relationship between ECI and RE is stronger for primary material importers and countries with stable institutions. Assessing a country's level of ECI also allows the outlook of future RE trends. We explain how ECI influences RE at the product level by establishing the product space for each country and by defining core products that contribute to a high product complexity index, high RE (i.e., unit price) and promising expansibility (i.e., core number), which indicates the potential to produce more advanced products in the future. Policies that improve economic complexity and invest in core products seem to be a priority to achieve sustainable development.