Analyzing Algeria's Position in the Economic Complexity Index and Product Space: Insights into Export Diversification and Structural Transformation Prospects

Abstract

This study aims to analyze Algeria’s position in terms of economic complexity and product space using the methodology of the Atlas of Economic Complexity developed by Harvard University. The research focuses on evaluating Algeria’s Economic Complexity Index (ECI) in comparison with a sample of countries, while analyzing the structure and dynamics of Algerian exports through the product space framework. It seeks to understand the constraints hindering export diversification and explore prospects for structural transformation in the Algerian economy.

The findings reveal that Algeria ranks 125th globally in the ECI, reflecting its heavy reliance on natural resources, particularly oil, and limited export diversification. Its productive structure is concentrated in the periphery of the product space, constraining its ability to produce complex manufactured goods. Compared to neighbors like Tunisia and Morocco, Algeria lags in product diversification and integration with complex products, impeding structural transformation. Between 2004 and 2019, Algeria added only two new export products, underscoring the need for policies to enhance productive capabilities.