Countries with higher economic complexity scores—a calculation based on the diversity and complexity of a country’s exports—tend to have greater labor productivity. This may suggest a potential link between a nation’s economic structure and its overall productivity levels, McKinsey global managing partner Bob Sternfels and senior partner Tracy Francis and coauthors explain. Higher-income G-20 countries shifted from agrarian to industrial and service-based economies, resulting in higher economic complexity scores. Conversely, many middle-income economies tend to have relatively low economic complexity due to their reliance on commodities.
Image description:
A scatterplot shows the correlation between economic complexity and labor productivity for a selection of G-20 countries in 2021. The x-axis represents the economic complexity score, ranging from 0 to 100, and the y-axis shows labor productivity per person employed, measured in thousands of US dollars and adjusted for purchasing-power parity.
Higher-income countries generally exhibit higher economic complexity scores and higher labor productivity than middle-income countries . The size of each circle corresponds to the share of commodities in each country’s total merchandise exports in 2021. For instance, the US, with a high economic complexity score and labor productivity exceeding $150,000, has a relatively small circle size, indicating a lower share of commodities in its exports. Conversely, countries such as Indonesia and Brazil , despite their relatively lower economic complexity scores and labor productivity below $50,000, have larger circle sizes, implying a greater reliance on commodity exports.
Source: Economic Complexity, Harvard Growth Lab; McKinsey Global Institute analysis.
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To read the report, see “Toward action: A G20 agenda for sustainable and inclusive growth,” September 27, 2024.