Quinten De Wettinck 

(KU Leuven) 

will give a presentation on : 

Identifying sustainable diversification strategies using economic complexity theory

Abstract : 

Economic complexity theory has emerged as a powerful framework for understanding how the accumulation of productive knowledge and capabilities within countries drives economic diversification. While the field has increasingly emphasised the connection with sustainability, an integrated approach that explicitly accounts for potential trade-offs between complexity and sustainability objectives is still lacking. This paper leverages the BACI (Base pour l’Analyse du Commerce International) international trade data to construct a country-product specialisation network from which measures of relatedness and economic complexity are derived. In addition, the Social Progress Index and Environmental Performance Index are used to create product-level indicators of social and environmental performance. By combining this information into a metric that quantifies the alignment between the complexity and sustainability performance of prospective diversification opportunities, this paper explores the extent to which economic complexity and relatedness facilitate or constrain sustainable diversification. Preliminary results reveal that despite the strong overall connection between complexity and both social and environmental sustainability, focusing solely on increasing complexity is insufficient to diversify into more sustainable industries. This is especially true for middle- and low-income countries, as they often face stronger trade-offs between complexity and environmental outcomes. These results provide an alternative perspective on environmental Kuznets curves, underscoring the necessity of diversification into unrelated, yet more sustainable and complex products to foster sustainable development. 

with Karolien De Bruyne (KU Leuven) and Wouter Bam (University of British Columbia)

• The Leuven-Louvain Trade Workshop are held online.