A new metric for countries’ fitness and products’ complexity
A quantitative assessment of the non-monetary advantage of diversification represents a country’s hidden potential for development and growth.
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.
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.
Network theory finds unexpected interactions between the number of products a country produces and the number of countries producing each product.