By Justin Lin, Masud Cader, and Luciano Pietronero
The path to becoming an advanced economy can be a difficult one that is fraught with obstacles, traps, and frequent reversals. Yet in the past half century several East Asian nations have completed the journey by increasing their “economic fitness”—implementing structural changes and leveraging their comparative advantages. Complexity and Economic Fitness is a methodology that measures the stage of an economy’s development and suggests feasible upgrades to more sophisticated production and diversity, which can lead to greater global competitiveness. This note highlights the East Asian lessons that African nations, and Ethiopia in particular, are putting to use. These include focusing on competitiveness in select industries, acquiring know-how from global leaders, seeking foreign partners and investment, and developing a national strategy to create the industries of the future. The application of these lessons is also of interest to private investors, as it can allow them to identify the economies utilizing Economic Fitness analyses and thus offer opportunities for growth and investment.