Based on the economic complexity index, Japan, Switzerland, and Germany have the most diverse economies in the world. Japan’s prominence on the list is attributed to the country’s focus on producing sophisticated and high-tech items which account for a significant portion of its annual exports. Switzerland’s world-famous watch industry earns the country the title of having the second-most diverse economy while Germany has its industry sector to thank for having the world’s third-most diverse economy.
Countries With the Most Diverse Economies
Japan is recognized as the country with the world’s most diverse economy, an attribute that the country has due to the sophistication of its exports. Originally known for its automobile industry, Japan had to adapt after facing stiff competition from its neighboring countries particularly China and South Korea. As a result, the country now focuses on the production of high-tech and sophisticated items such as robotics, optical fibers, biochemistry products, and hybrid vehicles. The country enjoys a favorable balance of trade with its annual exports exceeding its annual imports by about $58 billion. The primary export goods from Japan include motor vehicles (accounting for 14.9% of the total exports), steel and iron products (accounting for 5.4% of the total exports), auto parts (accounting for 4.8% of its total exports), and semiconductors (accounting for 5% of its total exports).
Switzerland has the most diverse economy in Europe and ranks second globally. The items produced in the country are uncommon, an example being its luxurious watches. The value of watch exports from Switzerland reached $20 billion in 2011. Exports from Switzerland exceed its imports by about $20 billion, an indication of the favorable balance of trade that the country enjoys. Watches, machinery, and chemicals make up the bulk of exports from Switzerland which are cumulatively valued at $0.22 trillion per year. In contrast, the annual imports destined for Switzerland are valued at $0.20 trillion with vehicles, textiles, chemicals, and machinery being the main import goods.
Europe’s largest economy, Germany, is recognized as having the third-most diverse economy in the world. The commodities produced in Germany are ubiquitous, earning it the reputation of having a diverse economy. As an example, the country is among the world’s largest producers of wind turbines. The country has a favorable balance of trade, with its trade surplus of over $300 billion being the largest in the world. Germany’s annual exports are valued at about $1.401 trillion, the bulk of which is comprised of pharmaceuticals, chemicals, machinery, electronic and computer products, and motor vehicles. The country’s annual imports, in contrast, are valued at $1.104 trillion, with oil and gas, machinery, metals, data precision equipment, and foodstuffs making up the bulk of the imports.
The Economic Complexity Index
Ricardo Hausmann and Cesar A. Hidalgo are responsible for coming up with the economic complexity index. The index is a yardstick using which the diversity of a country’s economy is measured and is produced annually. Countries that rank highly on the index are characterized with producing uncommon commodities while those found at the bottom of the list are known for producing common commodities.