By Federico Musciotto & Matteo Neri
How can tariffs on certain sectors affect the growth of a country? What can be the impact of a hard Brexit? How can a private exporter find the best environment for his activity? Why should we care about the answers? As part of this year’s EU Datathon event, held in Brussels in June, FNA data scientists developed an app to help shed some light on these issues. The app is called EconCartography. It uses FNA visualisations and network analytics, and won first place. The EU Datathon competition aimed to promote the reuse of open data from across the European Union. 99 teams submitted creative ideas and 12 teams were shortlisted to develop their app.
The above questions are related to international trade. Today export trade represents more than 30% of global GDP, and it’s growing at a fast pace. Understanding how the export trade works can unleash huge growth potential for businesses both large and small.
Exports of goods and services (%GDP)
The problem is that because we live in an interconnected world, the answers to our questions are complex. In order to learn from this complex network of interactions we need to have a full understanding of both the tiny details and the global picture of international trade.
“EconCartography” aims to simplify this complexity.
The app is made of three components:
- First, a data aggregator. We built a platform that retrieves data from multiple sources. We use UN Comtrade, that stores over 3 billion records on the import/export of United Nation countries. We added Eurostat to combine the patterns of trade with high quality statistics on national economies along 19 years. We wanted to give anyone access to reliable data without the need of any specialist expertise.
- Second, network science analytics. This gives powerful methods to analyze the impact of global trade on single countries and vice versa. These tools come from our background as academics and data scientists. In the last few years they have also begun to appear in the research agenda of international organizations such as the World Bank Group. As we are committed to open data and open source, these two components are freely available to everyone to explore, expand and disseminate knowledge.
- EconCartography is an interactive discovery tool. From our dashboard you can explore one by one flows between countries and products. With a single glance you can visualize relevant information on trade competitiveness and the national economic macro indicators provided by Eurostat. You can also check trends over time, to forecast the growth of your business or your country.
The dedicated website created for the competition can be found at econcartography.eu.
Once there you will be able to navigate the interactive network of export patterns powered by FNA.
In the above screenshot, the size of the spot next to each country is proportional to its fitness, while the size of a product sector is proportional to its complexity.
Fitness is a measure of a country’s competitiveness and is a function of the complexity of goods exported by that country. The underlying assumption behind fitness is that the space of exportable products is not homogeneous: some goods come with a higher level of sophistication and technological requirements than others, i.e. they are more complex, and have higher impact on the economic performance of a country. Thus, simply increasing the number of exported products is not enough for a country to increase its competitiveness, and complexity should be taken into account. The power of fitness lies in its data-driven nature: to estimate the sophistication of a product we do not rely on experts’ taxonomisation, that often lacks comprehensiveness and requires constant updates. We let the data speak for itself. Indeed, fitness of countries and complexity of products are computed directly from the matrix of export data according to the following principle: countries with higher fitness are exporting more complex products while the more complex a product is, the higher the fitness of its exporting countries.
Hovering on a country reveals the historical evolution of the fitness and several macroeconomic indicators. At a glance we offer you a complete picture of the economy of single countries. It’s here that we gather the information collected from Eurostat, from GDP to labour cost and we add the insights from our analysis.
The user can then easily navigate the network to find the more complex products in which a country should invest, or identify the best export opportunities for an entrepreneur in a given country. The user will also be exposed to the effect of trade agreements on the cohesion of the EU.
But we also know that these agreements can be in danger. This is what we are witnessing with Brexit. Or, after decades, we are hearing again about tariff wars that can affect European countries. What could be the impact of these events? We are currently working on a feature that will help you answer these questions. The user will be able to drop or reduce the export towards a specific country, or in a given product, to forecast how this would affect the fitness of the exporting country.
EconCartography makes sense of a wealth of data and provides a valuable tool for anyone trying to understand international trade flows, understand the impact of market events or discover new trade opportunities.If you’d like to know more, or see a demo please do get in touch.