Imperialism in the Twenty-First Century. John Smith

is being loosened by Southern competitors

      Nevertheless, despite these and other high-profile examples of N-S competition, the overwhelmingly dominant form of interaction between firms in imperialist and low-wage economies is synergetic and complementary. The general absence of head-to-head competition between firms on opposite sides of the N-S divide is brought into sharp focus by the “complexity index” developed by Arnelyn Abdon, Marife Bacate, Jesus Felipe, and Utsav Kumar at the Asian Development Bank and by Harvard’s Ricardo Hausmann and César Hidalgo. This approach classifies both national economies and individual commodities according to their complexity, “complex economies” being “those that can weave vast quantities of relevant knowledge together, across large networks of people, to generate a diverse mix of knowledge-intensive products,” while complex products, for example, “medical imaging devices or jet engines, embed large amounts of knowledge and are the results of very large networks of people and organizations. By contrast, wood logs or coffee embed much less knowledge, and the networks required to support these operations do not need to be as large.”⁶²

       The “Index of Complexity”

      To explain the idea of complexity, Abdon et al. use the simile of a Lego bucket to represent a country and various kinds of Lego pieces to represent the capabilities available in the country:

      The different Lego models that we can build (i.e., different products) depend on the kind, diversity, and exclusiveness of the Lego pieces that we have in a bucket…. A Lego bucket that contains pieces that can only build a bicycle most likely does not contain the pieces to create an airplane model. However, a Lego bucket that contains pieces that can build an airplane model may also have the necessary pieces needed to build a bicycle model…. Hence, determining the complexity of an economy by looking at the products it produces amounts to determining the “diversity and exclusivity” of the pieces in a Lego bucket by simply looking at the Lego models it can build.⁶³

      Hausmann and Hidalgo provide a useful illustration of the number-crunching methodology used to generate their Index of Complexity:

      Consider the case of Singapore and Pakistan. The population of Pakistan is 34 times larger than that of Singapore. At market prices their GDPs are similar since Singapore is 38 times richer than Pakistan in per capita terms…. They both export a similar number of different products, about 133. How can products tell us about the conspicuous differences in the level of development that exist between these two countries? Pakistan exports products that are on average exported by 28 other countries (placing Pakistan in the 60th percentile of countries in terms of the average ubiquity of their products), while Singapore exports products that are exported on average by 17 other countries (1st percentile). Moreover, the products that Singapore exports are exported by highly diversified countries, while those that Pakistan exports are exported by poorly diversified countries. Our mathematical approach exploits these second, third and higher order differences to create measures that approximate the amount of productive knowledge held in each of these countries.⁶⁴

TABLE 3.1: Total Exports, by Product Complexity Percent of total exports in each Product Complexity Level (1 = highest; 6 = lowest)

      Source: Table 6 in Arnelyn Abdon, Marife Bacate, Jesus Felipe and Utsav Kumar, Product Complexity and Economic Development, Levy Economics Institute Working Paper No. 616 (2010).

      “Diversity” is here defined as the number of products that a country exports with “revealed comparative advantage,” that is, where their share of the global market in that good is greater than their share of global population, the idea being that countries specialize in what they do best, thereby exploiting their comparative advantage, and this is revealed in the composition of their exports.

      One deficiency of complexity theory is that unavailability of data prevents its extension to trade in services. More serious, in the context of the present discussion, is that, in the words of World Bank researchers, “The technological sophistication and competitive stature of an exporter’s industrial base can be exaggerated when exports are used as a measure of industrial capability.”⁶⁵ Thus China’s complexity score will be exaggerated by its export of iPhones and other electronic goods that are assembled, but not manufactured, in that country. Complexity theorists are aware of this problem, but their remedy is ineffective: “Countries may also export things they do not make. To circumvent this issue we require that countries export a fair share of the products we connect them to.”⁶⁶ “Fair share” means when the share of a given commodity in a country’s total exports is greater than the global share of this commodity in global exports as a whole, that is, when its revealed comparative advantage (RCA) is greater than one—but iPhones, etc., will all pass this test and thus lead to an overestimation of China’s complexity score.

      Abdon et al.’s Complexity Ranking lists 124 nations according to the complexity of their exports (see Table 3.2), while Hausmann and Hidalgo generate an Economic Complexity Index comprising 128 countries. Both present a broadly similar picture rich with fascinating details. In Abdon et al.’s ranking, all of the ten most complex nations are imperialist nations. In Hausmann and Hidalgo’s table Singapore, Slovenia, and the Czech Republic make it into the top ten most economically complex nations. Norway, Australia, and New Zealand, also members of this exclusive club, appear much further down among a slew of middle-income Southern nations, their position depressed by the large share of primary commodities in their exports. Also notable is the lowly position of Greece and Portugal, the two countries most battered by the Eurozone crisis, indicating that these nations directly compete not with core Eurozone countries, but with China and other low-wage nations.⁶⁷ Pakistan, Sri Lanka, Bangladesh, and Cambodia, four countries whose exports consist mostly of garments, languish at the bottom of the table among the poorest nations on earth.

      There is a broad consensus among economists and policy makers that the loss of competitiveness by peripheral countries in the Eurozone vis-à-vis Germany and other core countries is at the heart of the forces tearing Europe apart. Unable to restore their competitiveness through currency devaluation, their only option is savage cuts in nominal wages, including that part of it received in the form of social benefits. Contemplating the divergence between German and Mediterranean productivity, Financial Times journalist Samuel Brittan commented that “even the Greek colonels, Franco, Mussolini or Salazar would have been hard put to reduce nominal wages on the scale required.”⁶⁸ But this broad consensus rests on a false premise—that Germany is Greece’s, Spain’s, etc., principal rival. As Jesus Felipe and Utsav Kumar have pointed out:

      Ireland, Spain, Portugal, and Greece do not compete directly with Germany in many products that they export and hence comparing their aggregate unit labor costs and drawing conclusions is probably misleading…. German exports are concentrated in the most-complex products of the complexity scale … in the case of Greece and Portugal, their exports are concentrated in the least-complex groups…. Their export shares (by complexity groups) are similar to those of China. If China were the correct comparator, then perhaps the situation of the European countries would be significantly worse. We believe that this is where the real problem of the peripheral countries lies…. The problem is that they are stuck at middle levels of technology and they are caught in a trap. Reducing wages would not solve the problem.⁶⁹

TABLE 3.2: Complexity Ranking

      Source: Appendix C in Arnelyn Abdon, Marife Bacate, Jesus Felipe, and Utsav Kumar, Product Complexity and Economic Development, Levy Economics Institute Working Paper No. 616 (2010).

      The European Union is a club of imperialist nations, part of the united front with other imperialist powers against so-called emerging nations, and which during the neoliberal era has considerably deepened its exploitative and parasitic relation with the Global South. Spain, Portugal, and Greece are minor imperialist nations whose economies, banking