Related papers: Optimizing Economic Complexity
Economic complexity has been linked to sustainability outcomes, such as income inequality and greenhouse gas emissions. Yet, it is unclear whether the pursuit of complex and/or related activities naturally aligns with these outcomes, or…
Countries and cities are likely to enter economic activities that are related to those that are already present in them. Yet, while these path dependencies are universally acknowledged, we lack an understanding of the diversification…
A new framework for portfolio diversification is introduced which goes beyond the classical mean-variance approach and portfolio allocation strategies such as risk parity. It is based on a novel concept called portfolio dimensionality that…
Economic complexity measures aim to quantify the capability content or endowment of industries and territories; however, capabilities are not observable, and therefore cannot be directly used in the computations. We estimate such endowments…
Economic complexity reflects the amount of knowledge that is embedded in the productive structure of an economy. It resides on the premise of hidden capabilities - fundamental endowments underlying the productive structure. In general,…
We analyze the decisive role played by the complexity of economic systems at the onset of the industrialization process of countries over the past 50 years. Our analysis of the input growth dynamics, based on a recently introduced measure…
We provide a mechanistic foundation for economic complexity methods. In our model, an economy's ability to produce an activity depends on the joint presence of required capabilities. We analytically derive the Economic Complexity Index…
Recent studies highlight economic complexity's role in mitigating fiscal crises, often measured via an economy's trade structure. Trade, however, is just one facet of an economy's structure and omits critical innovative activities like…
Debates over the trade-offs between specialization and diversification have long intrigued scholars and policymakers. Specialization can amplify an economy by concentrating on core strengths, while diversification reduces vulnerability by…
Optimal shelflisting invites profit maximization to become sensitive to the ways in which purchasing decisions are order-dependent. We study the computational complexity of the corresponding product arrangement problem when consumers are…
For Adam Smith, wealth was related to the division of labor. As people and firms specialize in different activities, economic efficiency increases, suggesting that development is associated with an increase in the number of individual…
We study the relationship between firms' performance and their technological portfolios using tools borrowed from the complexity science. In particular, we ask whether the accumulation of knowledge and capabilities related to a coherent set…
Investment returns naturally reside on irregular domains, however, standard multivariate portfolio optimization methods are agnostic to data structure. To this end, we investigate ways for domain knowledge to be conveniently incorporated…
Recent studies have found evidence of a negative association between economic complexity and inequality at the country level. Moreover, evidence suggests that sophisticated economies tend to outsource products that are less desirable (e.g.…
A recent paper by Hausmann and collaborators (1) reaches the important conclusion that Complexity-weighted diversification is the essential element to predict country growth. We like this result because Complexity-weighted diversification…
In economic literature, economic complexity is typically approximated on the basis of an economy's gross export structure. However, in times of ever increasingly integrated global value chains, gross exports may convey an inaccurate image…
When applying optimization method to a real-world problem, the possession of prior knowledge and preliminary analysis on the landscape of a global optimization problem can give us an insight into the complexity of the problem. This…
Economic complexity algorithms aim to uncover the hidden capabilities that drive economic systems. Here, we present a fundamental reinterpretation of two of these algorithms, the Economic Complexity Index (ECI) and the Economic Fitness and…
In recent years economic complexity has grown into an active field of fundamental and applied research. Yet, despite important advances, the policy implications of economic complexity remain unclear or misunderstood. Here I organize the…
Initially designed to predict and explain the economic trajectories of countries, cities, and regions, economic complexity has been found applicable in diverse contexts such as ecology and chess openings. The success of economic complexity…