Indicators of Product Sophistication and Factor Intensities: Measurement Matters

  • Stephan Huber
Chapter
Part of the Contributions to Economics book series (CE)

Abstract

The widely used PRODY indicator by Hausmann et al. (J Econ Growth 12(1):1–25, 2007) allows the calculation of product sophistication and factor intensities at high levels of disaggregation. In this chapter I deal with its measurement, its conceptional limitations, its sensitivity to subjective decision making, its alternatives, and how to reap the best possible benefit from its usage. I introduce a theory-based alternative and investigate the sensitivity of empirical results with respect to different measures. In particular, I re-estimate the main results of Hausmann et al. (J Econ Growth 12(1):1–25, 2007) with 75 different measures. Small changes to the sample, the aggregation level, or the construction of the indicator can make a difference. Moreover, I offer two Stata programs that ease the calculation of various PRODY variants.

Notes

Acknowledgement

I thank Christoph Rust for excellent research assistance on the preparation of the Stata programs. Also, I thank Xenia Matschke and Joachim Möller for valuable comments. All errors are my own.

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Copyright information

© Springer International Publishing AG, part of Springer Nature 2018

Authors and Affiliations

  • Stephan Huber
    • 1
  1. 1.Fachbereich WirtschaftswissenschaftUniversity of RegensburgRegensburgGermany

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