Related papers: The Theory of Economic Complexity
Economic transformation -- change in what an economy produces -- is foundational to development and rising standards of living. Our understanding of this process has been propelled recently by two branches of work in the field of economic…
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.…
Economic growth is often associated with diversification of economic activities. Making a product in a country is dependent on having, and acquiring, the capabilities needed to make the product, making the process path-dependent. We derive…
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 this chapter the complex systems are discussed in the context of economic and business policy and decision making. It will be showed and motivated that social systems are typically chaotic, non-linear and/or non-equilibrium and therefore…
Economies are complex man-made systems where organisms and markets interact according to motivations and principles not entirely understood yet. The increasing dissatisfaction with the postulates of traditional economics i.e. perfectly…
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…
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…
We analyse global export data within the Economic Complexity framework. We couple the new economic dimension Complexity, which captures how sophisticated products are, with an index called logPRODY, a measure of the income of the respective…
Economic growth results from countries' accumulation of organizational and technological capabilities. The Economic and Product Complexity Indices, introduced as an attempt to measure these capabilities from a country's basket of exported…
This paper develops a new model of business cycles. The model is economical in that it is solved with an aggregate demand-aggregate supply diagram, and the effects of shocks and policies are obtained by comparative statics. The model builds…
We show how the Shannon entropy function can be used as a basis to set up complexity measures weighting the economic efficiency of countries and the specialization of products beyond bare diversification. This entropy function guarantees…
As the current thermo-industrial civilization expands, its technological and societal complexities increase. We suggest that physical power, economic activity and societal complexity are linked. A simple, intuitive model based on Systems…
Labor market institutions are central for modern economies, and their polices can directly affect unemployment rates and economic growth. At the individual level, unemployment often has a detrimental impact on people's well-being and…
Despite the growing importance of the digital sector, research on economic complexity and its implications continues to rely mostly on administrative records, e.g. data on exports, patents, and employment, that have blind spots when it…
We build on the interpretation of the Economic Complexity method as Correspondence Analysis (CA), and propose that the Canonical form of CA (CCA), which originated in the ecology literature, can be used to calculate multi-dimensional…
We propose a combinatorial model of economic development. An economy develops by acquiring new capabilities allowing for the production of an ever greater variety of products of increasingly complex products. Taking into account that…
In recent decades, trade between nations has constituted an important component of global Gross Domestic Product (GDP), with official estimates showing that it likely accounted for a quarter of total global production. While evidence of…
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…
Trade networks, across which countries distribute their products, are crucial components of the globalized world economy. Their structure is strongly heterogeneous across products, given the different features of the countries which buy and…