Work is the refuge of people who have nothing better to do. : Oscar Wilde

Friday, March 11, 2011

Of Carbide Tool Tips OR Oil Sands

This is not just about our incomes as Canadians. I think it's also about having more interesting careers.

Abdon et al published a paper recently that shows a strong relationship between a nation's product complexity and it's weighted mean GDP per capita.

Canada ranks about 14th in the complexity of the products that it produces. Some of the countries that lead us won't surprise you; some might.

I mentioned carbide tool tips in the title of this posting because (a) this is an item that is very high in the Abdon paper's list of the 100 most complex products (it's number 5), and (b) it's one of the few items that I can imagine a purpose for. When was the last time you heard about struggles to promote the manufacture of this or similar products in Canada?

In strong contrast, you know why I mentioned the oil sands in the title, don't you? Well, this appears in Abdon's list of the 100 least complex products. Nearby in the list are things like fresh or dried pineapples, groundnuts and frozen whole yellowfin tuna. Lacking complexity indeed.

To the extent that a nation can take decisions we can choose between high-complexity products such as carbide tool tips that yield higher incomes and oil sands.

Setting aside which items are likely to produce the greatest incomes for us (and trifles like environmental consequences), which products are more likely to give rise to a greater range of career options, would you say? Complex ones or less complex ones?

Abdon, A, Bacate, M, Felipe, J and Kumar, U (Sept 2010) "Product Complexity and Economic Development," Working Paper No. 616, Levy Economics Institute, Bard College.

Thanks to Jim Stanford of the Progressive Economics blog for making me aware of this paper here.