22 May

Matthieu Cristelli, “A New Metrics for Country Fitness and Product Complexity”

Wednesday May 22  2013
13.00
Scuola Normale Superiore
Aula Bianchi

Matthieu Cristelli
ISC-CNR, Institute for Complex Systems –
Department of Physics, “Sapienza” University

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 dynamic environment. The challenge is assessing quantitatively the non-monetary and non-income based competitive advantage of diversification which represents the hidden potential for development and growth. In a series of recent works [1,2] 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 Com-plexity. The idea underlying such an approach is that the intangible features determining the competitiveness of a country can be quantified by properly measuring what a country exports. 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. Given the paradigm of economic complexity, the correct and simplest approach to measure the competitiveness of countries is the one presented in this work.The two metrics allow to define a new kind of fundamental analysis of the hidden growth potential of countries. It is possible to compare non-monetary factors of fitness and complexity with measures of economic intensity such as the countries GDP per capita. We argue that this comparison is informative on the growth potential of countries. As an example, countries that show both a high fitness and a high complexity, but a low GDP per capita, are very likely to strongly boost their income in the next years. From preliminary analysis with growth data from 1995 to 2010, it is possible to see that results well reflect what occurred in the real world over that period.