Economists are famously bad at predicting growth. A new technique might help them get a little better. When assessing a country’s potential to prosper, economists typically look at aggregate measures such as education, investment or national debt. This hasn’t worked particularly well: China’s economy, for example, has kept growing at a fast pace even though […]
Economists are famously bad at predicting growth. A new technique might help them get a little better.
When assessing a country’s potential to prosper, economists typically look at aggregate measures such as education, investment or national debt. This hasn’t worked particularly well: China’s economy, for example, has kept growing at a fast pace even though they’ve been predicting a slowdown for nearly 30 years.
An emerging line of research — which I’ve written about before — points to what the economists might be undervaluing: the importance of a country’s technological and industrial capabilities. The research focuses on “economic fitness,” a measure that seeks to capture the range and sophistication of the goods a country produces. Two years ago, for example, it suggested that China would keep growing rather than succumb to a much-predicted “hard landing” — a forecast that proved correct.
