The 'Sophistication' Of Exports: A New Measure Of Product Characteristics

Trade data are often classified by product characteristics in the trade, technology and development literature to analyze trade patterns, competitive performance and structural change. However, existing classifications are constrained in that trade data are far more detailed than the industry data on which categories are based (e.g. current classifications only have 4-5 technology groups). We propose a new classification - 'sophistication' - as a means of analyzing product characteristics in great detail, based on the average income of exporting economies. Sophistication captures more than technical characteristics; it includes product differentiation, production fragmentation, resource availability and other factors. However, it has the advantage of providing unique continuous scores for each product at any level of detail. We calculate sophistication scores for 237 exports at the 3-digit SITC level and 766 exports at the 4-digit level for 1990 and 2000 (detailed values can be provided on request). We show sophistication scores for exports by selected countries, technology groups and industries. Our intention is to provide a database for further empirical analysis.