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Glossary

Economic Complexity Index

The ECI ranks countries according to the similarity of the products they are competitive in. Countries with a high ECI tend to specialise in more technologically sophisticated products.

Green Complexity Index

The GCI measures countries' green competitiveness based on the number and complexity of green products they are competitive in.

Green Complexity Potential

The GCP measures how much potential a country has to diversify into green, complex products in the future based on its existing competitive strengths.
Select countries of interest to compare the ranking of GCI, GCP and ECI over time.
Years refer to the end of each 5-year period (e.g. 2005 is based on average trade values over the period 2001-2005).

The Product Complexity Index (PCI) is used as a proxy for the technological sophistication of a product.

Proximity measures the product's similarity to the country's productive capabilities and is correlated with the probability of developing future competitiveness in a product.

Revealed Comparative Advantage (RCA) indicates whether the country exports a product competitively.

Green competitive strengths are products that a country exports competitively (RCA > 1).

Green opportunities are products that a country does not yet export competitively (RCA <1), but could develop competitiveness in going forward.

The size of the markers represents current .


Move the slider to the desired time period. All measures are calculated using rolling 5-year averages, starting from 1995-1999 and ending in 2016-2020.

A green product is a product with environmental benefits. Based on the APEC, OECD and WTO lists of green goods.

The Hirschman-Herfindahl Index (HHI) measures concentration in the global export market. It is calculated by summing the square of each country's share in global exports of a product/sector.



Contact

For questions, suggestions or to collaborate, get in touch at info@green-transition-navigator.org!

Suggested citation

Andres, P and Mealy, P (2021) Green Transition Navigator. Retrieved from www.green-transition-navigator.org.

Last Update: 03 May 2022

Mission

The transition to the green economy is teeming with opportunities. Our mission is to help countries identify them.

No two countries are the same

When it comes to navigating growth opportunities in the green economy, each country is different. Each has unique production capabilities and faces a different landscape of green growth opportunities. Consequently, one-size-fits-all green industrial strategy policies are likely to fall short.

A map of green competitiveness - and future green growth possibilities

Drawing on an expansive dataset of traded green* products , the Green Transition Navigator identifies countries' current competitive strengths and maps out new export opportunities that

(i) align with their existing productive capabilities, and
(ii) offer advantages in terms of technological sophistication and greater potential to open up future diversification opportunities.

Team

The Green Transition Navigator has been developed by Pia Andres (Grantham Research Institute at the London School of Economics and Oxford Martin School) and Dr Penny Mealy (World Bank Group, SoDa Labs at Monash Business School, Institute for New Economic Thinking at the Oxford Martin School and the Oxford Smith School of Environment and Enterprise). We anticipate that our team of two will grow with the Navigator.

Glossary

Revealed Comparative Advantage (RCA)
The share of product p in total exports by country i, divided by share of product p in global exports. If RCA>1, the country is assumed to be competitive in the product, as it exports more than its 'fair share'.
Product-to-product Proximity
The proximity between two products p and p' is calculated as the probability that a country has RCA>1 in p if it has RCA>1 in p' and vice versa.
Product-to-country Proximity
The proximity between a product p and a country c is calculated as the average product-to-product proximity between product p and all the products the country currently exports competitively. Product-to-country proximity is correlated with the probability of developing future competitiveness in a product.
Economic Complexity Index (ECI)
The ECI ranks countries according to the similarity of the products they are competitive in. Countries with a high ECI have competitive strengths that are similar to other countries with a high ECI, and these countries tend to be advanced economies that are able to export technologically sophisticated products competitively.
Product Complexity Index (PCI)
The PCI ranks products according to the similarity of the countries that export them competitively. High PCI products, which are exported competitively by high ECI countries, tend to reflect more technologically sophisticated products, and vice versa for low PCI products. The PCI is often used as a proxy for the technological sophistication of a product.
Green Complexity Index (GCI)
The GCI measures countries' green competitiveness based on the number and PCI of green products they are competitive in.
Green Complexity Potential (GCP)
The GCP measures how much potential a country has to diversify into green, complex products in the future based on the proximity and complexity of products it is not yet competitive in.
Hirschman-Herfindahl Index (HHI)
Calculated at the product and sector level. Measures concentration in the global export market. Calculated by summing the square of each country's share in global exports of a product/sector.
'Green' product
Product with environmental benefits. Based on APEC, OECD and WTO lists of green goods, which have been filtered and categorised based on the methodology outlined in Mealy and Teytelboym, 2020.
Green Competitive Strengths
Green products that a country exports competitively (RCA > 1).
Green Opportunities
Green products that a country does not yet export competitively (RCA <1), but could develop competitiveness in going forward.

Methodology

The Green Transition Navigator is based on previous research by Mealy and Teytelboym, 2020, which developed a quantitative methodology for measuring countries' current green production capabilities, identifying new green export opportunities, and predicting future green export growth.

*Green products - or products with environmental benefits - are based on a compilation of the APEC, OECD and WTO green goods classifications.

The methodology draws on existing work in economic geography that has shown that places are more likely to develop a competitive advantage in proximate products and sectors that involve similar (or 'related') underlying production know-how to those they are already competitive in (Hidalgo et al., 2007a; Neffke et al., 2011).

It also leverages previous research on economic complexity, which has demonstrated that developing competitiveness in more complex products or industries tends to generate higher future growth and diversification outcomes (Hidalgo et al., 2007a; Hidalgo et al., 2007b; Hausmann et al., 2007).

The Navigator measures are calculated using country-level trade data at the HS1992 6-digit level from CEPII's BACI database. The data shown is based on annual averages in trade values for rolling 5-year-periods from 1995-1999 to 2016-2020 (where no time range is selected or shown, the data is based on the most recent period, which is 2016-2020). This approach was taken in order to prevent the analysis from being skewed by short-term fluctuations in trade.

Importantly, the analysis presented by the Navigator is not prescriptive or intended to be definitive. It is up to the user to consider the relative merits of proximity and complexity, and to use and interpret the analysis presented alongside other relevant indicators and information. While empirical analysis has shown that countries have a higher probability of developing future competitiveness in more proximate products, this does not mean that targeting more distant sectors is without its benefits.

Please give credit when using the data or analysis presented here in other work. Suggested citation:
Andres, P and Mealy, P (2021) Green Transition Navigator. Retrieved from www.green-transition-navigator.org.