Country Case Studies in Economic Fitness: Mexico and Brazil

We leverage a new complexity framework called Economic Fitness, which characterizes an economy’s level of diversification and its capabilities to produce more complex products. It can be used to predict economic growth and competitiveness. This paper describes an application of Economic Fitness called the Country Opportunity Spotlight (COS) that assesses a country’s current level of capabilities and demonstrates which industries have upgrade and diversification potential given those capabilities. It helps unlock the explanatory and predictive power of Economic Fitness for policymakers. COS results serve as a starting point for policymakers to shape and validate priorities, compare countries, asses the capabilities needed in specific industries and begin identifying constraints to growth. We showcase the use of this framework for Mexico and Brazil. These countries provide an interesting case study, as they have similar growth outlooks yet demonstrate different productive capabilities. Examining Mexico and Brazil side by side illustrates the value this analysis can have on deciphering structural change and decision making and at the same time reinforces the need for a nuanced consideration of each country’s unique context.