A New Metrics for Countries' Fitness and Products' Complexity

By Andrea Tacchella, Matthieu Cristelli, Guido Caldarelli, Andrea Gabrielli, Luciano Pietronero. Scientific Reports, 2012

577 citations recorded by the source corpus.

Classical economic theories prescribe specialization of countries industrial production. Inspection of the country databases of exported products shows that this is not the case: successful countries are extremely diversified, in analogy with biosystems evolving in a competitive dynamical environment. The challenge is assessing quantitatively the non-monetary competitive advantage of diversification which represents the hidden potential for development and growth. Here we develop a new statistical approach based on coupled non-linear maps, whose fixed point defines a new metrics for the country Fitness and product Complexity. We show that a non-linear iteration is necessary to bound the complexity of products by the fitness of the less competitive countries exporting them. We show that, given the paradigm of economic complexity, the correct and simplest approach to measure the competitiveness of countries is the one presented in this work. Furthermore our metrics appears to be economically well-grounded.

Subfields: Computational Theory and Mathematics, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/eeebffb3148dfcab6d2b7b464ad72feeff53c21f

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Citations in the corpus

The Geography of Complex Knowledge (2017, methodology): “…EO G R A PH Y O F C O M PLEX K N O W LED G E Caldarelli et al. (2012) show that the iterative method of reflections is an approximation of a fixed-point theorem based on Markov chain analysis.5 Additional metrics derived from this mathematical reformulation are outlined in Tacchella et al. (2012).”
Quantifying China's Regional Economic Complexity (2017, background): “[39] developed a new statistical approach which defines a country’s Fitness and a product’s complexity by the fixed points of a set of non-linear iterative equations [40], where the complexity of products is bounded by the fitness of the less competitive countries exporting them.”
Economic complexity and the green economy (2020, methodology): “8 GCI robustness tests using alternative complexity measures An alternative approach for estimating the complexity of productive capabilities associated with countries and exported products has also being proposed by Tacchella et al. (2012). This methodology uses the same binary Mcp matrix construct”