A network analysis of countries’ export flows: firm grounds for the building blocks of the economy
Network theory finds unexpected interactions between the number of products a country produces and the number of countries producing each product.
In this paper we analyze the bipartite network of countries and products from UN data on country production. We define the country-country and product-product projected networks and introduce a novel method of filtering information based on elements’ similarity. As a result we find that country clustering reveals unexpected socio-geographic links among the most competing countries. On the same footings the products clustering can be efficiently used for a bottom-up classification of produced goods. Furthermore we mathematically reformulate the ‘‘reflections method’’ introduced by Hidalgo and Hausmann as a fixpoint problem; such formulation highlights some conceptual weaknesses of the approach. To overcome such an issue, we introduce an alternative methodology (based on biased Markov chains) that allows to rank countries in a conceptually consistent way. Our analysis uncovers a strong non-linear interaction between the diversification of a country and the ubiquity of its products, thus suggesting the possible need of moving towards more efficient and direct non-linear fixpoint algorithms to rank countries and products in the global market.
More in Economic complexity
A new algorithm unveils complicated structures in the bipartite mapping between countries and products of the international trade network.
A new non-monetary metric captures diversification, a dominant effect on the globalised market, and the effective complexity of products.
Coupled non-linear maps extract information about the competitiveness of countries to the complexity of their products from trade data.
Less developed countries have to learn simple capabilities in order to start a stable industrialization and development process.
Dynamical systems theory predicts the growth potential of countries with heterogeneous patterns of evolution where regression methods fail.
A quantitative assessment of the non-monetary advantage of diversification represents a country’s hidden potential for development and growth.