Publications
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Path to innovation: an Economic Complexity analysis of technological perspectives in the EU
Over the past 25 years, the world has witnessed a significant surge in patenting activity, underscoring the crucial role of… Show more frontier technologies in driving economic growth and competitiveness. While the EU remains a leading global innovator, its competitive edge is under threat. To address this challenge, the EU must create a vibrant industrial ecosystem that nurtures innovation. Advanced Materials, with their potential to transform industries and enable breakthrough innovations, are a crucial component of this ecosystem, and offer a unique opportunity to strengthen the EU's economic growth, competitiveness, strategic autonomy, and digital and green transformation. This report is intended to lend support to the implementation of EU policies aimed at revitalising the EU economy – such as the forthcoming Advanced Materials Act – by identifying areas where Europe can enhance its technological leadership. The analysis is grounded in the Economic Complexity approach, which provides a framework to analyse the existing technological capabilities of the EU, and to identify untapped diversification opportunities for the Member States and their regions. The results of this report suggest that the EU leadership in many traditional technologies is threatened by rising innovation activities by its main competitors, mainly China and the US. To close its innovation gap, the EU can leverage its existing capabilities to enhance competitiveness in Advanced Materials, particularly in areas such as Biomaterials, Glass, and Cements. Show less
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Challenges and opportunities for the EU labour market from AI development
The European Commission adopted the Digital Europe Programme to equip the EU workforce with the necessary skills to cope with… Show more labour market changes induced from innovation in ad-vanced digital technologies as AI. → Clerical work and cognitive tasks are considered to be more exposed to AI substitution, whereas manual, operational, and technical tasks are comparatively less exposed. → AISE is a job-specific AI exposure metric based on data from financed start-ups whose output could potentially replace a job. → Results reveal the existence of a gap between potential and actual AI exposure, as start-ups are more likely to adopt AI development in niche tasks. → The AISE-based analysis reveals that cognitive jobs are heterogeneously AI-exposed, and exposure depends on advanced cognitive skills requirements. → Beyond technical feasibility and economic via-bility, ethical and social considerations and trust in AI capabilities determine job expo-sure to AI. → Considering EU countries’ structure of the la-bour market, Germany and Belgium are the most actually AI-exposed. The largest gap be-tween potential and actual exposure is de-tected for Sweden and Italy, the former be-ing more potentially AI-exposed than actu-ally. The opposite is true for Italy Show less
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EU competitiveness in net-zero technologies: Insights from patents and economic complexity
The EU seeks to prioritise investments in strategic technologies where it can be competitive. An approach for assessing the EU's potential… Show more competitiveness in new and established technologies is presented, applying Natural Language Processing to patent data and using the Economic Complexity framework. Technical expert knowledge is not a required input (but useful for interpretation). By way of example, it is applied to 15 net-zero technologies of the Net Zero Industry Act. The results show a potentially high EU manufacturing competitiveness for wind, heat recovery and ocean technologies, and the opposite for photovoltaics and batteries. The method is cross-checked by comparison with independent analysis of the JRC’s Clean Energy Technology Observatory. Detailed analyses of individual Member States' technological capabilities are also possible, to identify where specific technologies find the most fertile ground to flourish – e.g. Germany for electricity grid hardware and Italy for heat recovery technology. The approach can zoom into subclasses and variants of technologies; e.g., Carbon Capture and Storage appears overall to have low prospects, but zooming in reveals that the EU could be a leader in capture technologies (but is weaker in storage and transport). Show less
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Economic complexity analytics: country factsheets 2024
The economic complexity framework is inspired by evolutionary and institutional literature. It interprets the economy as an interconnected ecosystem by… Show more shifting the focus from aggregate quantities like GDP that reveal how much countries or regions produce to a more granular view revealing what they actually do (e.g. in which products they export or the in which technologies they innovate). This approach leverages high-quality trade and patent data as well as advanced techniques from machine learning, network science, and complex dynamical systems to provide a nuanced understanding of a country's economic sophistication and capabilities. These factsheets aim to showcase the potential of the economic complexity framework by providing quantitative insights into policy-relevant issues and to illustrate the kind of insights it can offer policymakers regarding the industrial and innovation landscape of Europe. Each factsheet focuses one EU member state and follows a fixed structure comprising six sections, each consisting of a chart and some accompanying text to aid interpretation. Overall, the factsheets aim to provide a comprehensive overview of the analytical potential of the economic complexity framework, demonstrating its value in informing policy decisions and contributing to economic development. They highlight the importance of understanding the intricate dynamics of industrial and innovation systems to drive strategic economic growth in the EU. Show less
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Global Value Chain analysis of the EU automotive sector under the lens of Economic Complexity
This policy brief investigates the structural vulnerabilities and competitive dynamics of the EU27 automotive sector, with a focus on the… Show more complexity and the fragmentation of production processes across global value chains. The analysis integrates input-output tables to quantify the automotive sector's reliance on non-EU economic branches, alongside an economic complexity framework to assess the underlying productive capabilities of European countries in automotive-related industries. The findings indicate an increasing dependency on extra-EU suppliers, particularly China, for critical components such as lithium-ion batteries, which heightens supply chain risks. Currently, Eastern European countries-most notably Poland, Czechia, and Hungary-have enhanced their competitiveness in the production of automotive components, surpassing traditional leaders such as Germany. The policy brief offers new insights into the challenges posed by the ongoing electric mobility transition in the European Union, particularly in relation to electric accumulators. Show less
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Handbook of Economic Complexity for Policy
This handbook collects JRC’s six years of experience on economic complexity for policy. It is a tool for practitioners who… Show more aim at understanding the methods of complexity from data collection to policy recommendations. After introducing the reader to this innovative unconventional approach, the volume articulates methods and analysis in three parts. First: data. Chapters 2, 3, and 4 describe the datasets that are most commonly used for economic complexity analysis, with a deep dive in trade, patents, and scientific publications, which have played a greater role in JRC’s research. Second: methods. This second part shows how to use the available data for analysis. Most notably, it describes in great detail how to compute fitness and complexity indices, as well as relatedness metrics. Third: policy. The final part of this handbook collects policy work - mainly from the JRC - to show how the methods can be put into practice. Show less
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Economic complexity and the sustainability transition: A review of data, methods, and literature
Economic Complexity (EC) methods have gained increasing popularity across fields and disciplines. In particular, the EC toolbox has proved particularly promising… Show more in the study of complex and interrelated phenomena, such as the transition towards a greener economy. Using the EC approach, scholars have been investigating the relationship between EC and sustainability, proposing to identify the distinguishing characteristics of green products and to assess the readiness of productive and technological structures for the sustainability transition. This article proposes to review and summarize the data, methods, and empirical literature that are relevant to the study of the sustainability transition from an EC perspective. We review three distinct but connected blocks of literature on EC and environmental sustainability. First, we survey the evidence linking measures of EC to indicators related to environmental sustainability. Second, we review articles that strive to assess the green competitiveness of productive systems. Third, we examine evidence on green technological development and its connection to non-green knowledge bases. Finally, we summarize the findings for each block and identify avenues for further research in this recent and growing body of empirical literature. Show less
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PDF Is Export a Probe for Domestic Production?
Recent works leverage export data to assess country production structure and ultimately country relative competitiveness. These works mostly rely only… Show more on the exported part of the total country output for reasons of data availability, homogeneity, and quality. Here we use the World Input-Output Database (WIOD), which offers cross-country harmonized data that accounts both for domestic production and export, to investigate to what extent export is a proxy for domestic production. We find that export mirrors remarkably well domestic production for manufacturing sectors or sectors related to physical goods. Conversely, this relation fades away for service related sectors. We found those relations consistently across most of the 40 countries for which data are available. Show less
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PDF The new paradigm of economic complexity
Economic complexity offers a potentially powerful paradigm to understand key societal issues and challenges of our time. The underlying idea… Show more is that growth, development, technological change, income inequality, spatial disparities, and resilience are the visible outcomes of hidden systemic interactions. The study of economic complexity seeks to understand the structure of these interactions and how they shape various socioeconomic processes. This emerging field relies heavily on big data and machine learning techniques. This brief introduction to economic complexity has three aims. The first is to summarize key theoretical foundations and principles of economic complexity. The second is to briefly review the tools and metrics developed in the economic complexity literature that exploit information encoded in the structure of the economy to find new empirical patterns. The final aim is to highlight the insights from economic complexity to improve prediction and political decision-making. Institutions including the World Bank, the European Commission, the World Economic Forum, the OECD, and a range of national and regional organizations have begun to embrace the principles of economic complexity and its analytical framework. We discuss policy implications of this field, in particular the usefulness of building recommendation systems for major public investment decisions in a complex world. Show less
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Economic Complexity for competitiveness and innovation: a novel bottom-up strategy linking global and regional capacities
EU manufacturing has lost ground due to the low growth of the EU domestic economy and its diminished participation in… Show more global manufacturing value chains. EU industry is facing different transitions at the same time, including the digital transformation and the transition towards a net zero emission and circular economy. Developing technologies, products and solutions for this while having access to finance, resources and human capital equipped with the right skills are amongst the huge challenges to be overcome in the next decade. This implies the need for new business models and actors to ensure future competitiveness and employment. These competitive pressures challenge the EU as leading innovator in the world, which in turn is crucial for future industrial competitiveness. From the policy side, a more integrated approach to industrial, innovation and regional policies is necessary to trigger successful industrial transformation. In this environment, conventional economic analyses have shown limited usefulness. Indeed, Complex System analysis has highlighted since the '80s the limitation of conventional economic analyses to identify hidden trends in complex environments (Anderson, Arrow and Pines 1987). Economic Complexity is an alternative, non-conventional bottom-up and data-driven approach inspired by statistical physics and complex systems science. By producing quantitative, falsifiable results and relationships, it has great potential in the analysis of the current challenges in Innovation Systems. Show less