economic | Economics; Haussmann et al.’s network diagrammatic approach


This research essay of 2000-2500 words (approximate) must be an individual effort and must be handed in before the lecture in Week 12

Aim: To understand and evaluate Hausmann et al’s network diagrammatic approach to the analysis of Australia’s trade-related opportunities for growth in income and wealth from a Competency perspective as an alternative to mainstream trade theory.

Part One: Define dynamic capabilities drawing on the discussion in Teece et al., (1997) and distinguish between them and both resources and competencies. Characterise the relationship that Hausmann et al., (2014) claim is the one holding between competencies and products. Briefly discuss whether they explicitly or implicitly employ the notion of a capability. (500-625 words)

Part Two: Summarize Hausmann et al’s (2014) argument about the way that capabilities are expressed by their network diagrams based on trade proximity links (see Hidalgo and Hausmann, 2009, for an overview) (500-625 words)

Part Three: Examine the country diagrams that Hausmann et al., (2014) have constructed for Australia (on page 106 of the Atlas). Describe what they purportedly reveal about Australia’s trade-related opportunities for future growth in income and wealth (it may help if you follow the link from “The observatory of economic complexity” to the 2014 dataset for Australia). (500-625 words)

Part Four: identify some of the strengths and weaknesses of Hausmann et l’s network-based analysis he pages of the Atlas of Complexity.



Teece, David J., Gary Pisano, and Amy Shuen (1997) “Dynamic Capabilities and Strategic Management”, Strategic Management Journal, 18(7) (August): 509-533.

Hausmann, Ricardo, César A. Hidalgo, Sebastián Bustos, Michele Coscia, Sarah Chung, Juan Jimenez, Alexander Simoes, and Muhammed A. Yıldırım (2014) The Atlas of Economic Complexity: Mapping Paths to Prosperity .

The observatory of economic complexity, .

Hidalgo, C.A., and R. Hausmann (2009) “The building blocks of economic complexity”, PNAS, June 30, 106(26): 10570–10575.


A theoretical understanding of the economic model, growth and development are critical to guiding the stability of the economy. Teece et al. (1997) introduce the dynamic capabilities in enabling a further understanding of the economy model and productivity. Dynamic capability is defined as “the firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments” (Teece et al.,1997). Dynamic capability is a guiding factor for the economy at large in surpassing through the highly volatile economy by extending, creating and modifying its resource base to match the changing environments.