Can the Method of Re?ections help predict future growth?

Building upon an original and fruitful research line, a recent paper by Hidalgo and Hausmann (2009) proposed new indicators of product sophistication and economic complexity build solely upon international trade data, in their Method of Re?ections. The authors ?nd their indicators for economic complexity to be highly related to countries’ income and show evidence supporting their use as predictors of future growth in the short and long run. This would make these indicators very appealing to empirical economists and policy-makers. This work tests these properties for the indicators constructing them upon a more disaggregated database and changing some other important methodological decisions. Results show that MR indicators are strongly related to income and they can be considered good predictors of long-term growth under certain conditions. Evidence supporting MR indicators as good predictors of short-term growth could not be found.