A New Metrics for Countries' Fitness and Products' Complexity

Andrea Tacchella, Matthieu Cristelli, Guido Caldarelli, Andrea Gabrielli, L. Pietronero

Scientific Reports · 2012 · 556 citations · 15 references

DOIFull text

Open access

Concepts

TL;DR

Traditional economic theory predicts specialization, yet data reveal that prosperous nations are highly diversified, resembling evolving biosystems. The study seeks to quantify the non‑monetary competitive advantage of diversification as hidden potential for development and growth. The authors develop a statistical method based on coupled non‑linear maps whose fixed point defines new metrics for country fitness and product complexity. The analysis shows that a non‑linear iteration bounds product complexity by the fitness of the least competitive exporters, and that the proposed metrics provide a simple, economically grounded measure of country competitiveness.

Abstract

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.

References

15