Economic Complexity: The Science That Could Solve Global Inequality

The Knowledge Gap Behind Inequality

Global inequality is often framed in terms of income or resources, but at its core lies a knowledge gap. Uneven accumulation of tacit and explicit knowledge explains why some countries produce complex, high-value goods while others remain stuck in low-value activities.

Why Cheap Labor Isn’t Enough

Many developing countries rely on low wages to attract manufacturing, but this strategy has limits. Complex manufacturing requires dense knowledge networks and trust, which cannot be bought cheaply. Without these, industries struggle to evolve.

Building Capability Ecosystems

Fostering education, infrastructure, institutional quality, and social capital is essential for accumulating knowledge. Innovation hubs and cluster policies can help countries move up the complexity ladder.

Economic Complexity as a Policy Tool

Measuring complexity helps identify realistic diversification paths and growth opportunities. Policymakers can target investments that build on existing capabilities, accelerating development.

Conclusion

Understanding economic complexity provides a hopeful framework for addressing inequality. By focusing on knowledge accumulation and networks, we can create more inclusive and prosperous societies.