The "sophistication" of exports: A new trade measure

Trade data are often classified by product characteristics. We propose a new classification "sophistication" as a means of distinguishing between products. We construct a sophistication index based on the income levels of exporting economics. Sophistication captures a range of factors including technology, ease of product fragmentation, natural resource availability, and marketing. We calculate sophistication scores at the 3- and 4-digit levels and test how far the index relates to existing technological classifications of products. We use the index to examine trade patterns and illustrate how it can be applied in the analysis of export performance of individual economics. (c) 2005 Elsevier Ltd. All rights reserved.