A New and Stable Estimation Method of Country Economic Fitness and Product Complexity - CSH

A New and Stable Estimation Method of Country Economic Fitness and Product Complexity


Details


We present a new metric estimating fitness of countries and complexity of products by exploiting a non-linear non-homogeneous map applied to the publicly available information on the goods exported by a country. The non homogeneous terms guarantee both convergence and stability. After a suitable rescaling of the relevant quantities, the non homogeneous terms are eventually set to zero so that this new metric is parameter free. This new map almost reproduces the results of the original homogeneous metrics already defined in literature and allows for an approximate analytic solution in case of actual binarized matrices based on the Revealed Comparative Advantage (RCA) indicator.

This solution is connected with a new quantity describing the neighborhood of nodes in bipartite graphs, representing in this work the relations between countries and exported products. Moreover, we define the new indicator of country net-efficiency quantifying how a country efficiently invests in capabilities able to generate innovative complex high quality products. Eventually, we demonstrate analytically the local convergence of the algorithm involved.

 

V. Servedio, P. Buttà, D. Mazzilli, A. Tacchella, L. Pietronero, A New and Stable Estimation Method of Country Economic Fitness and Product Complexity, Entropy 20(10) (2018) 783