Preprint Article Version 1 This version is not peer-reviewed

A New and Stable Algorithm for Economic Complexity

Version 1 : Received: 26 July 2018 / Approved: 26 July 2018 / Online: 26 July 2018 (11:49:41 CEST)
Version 2 : Received: 17 September 2018 / Approved: 18 September 2018 / Online: 18 September 2018 (06:13:25 CEST)

A peer-reviewed article of this Preprint also exists.

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

Journal reference: Entropy 2018, 20, 783
DOI: 10.3390/e20100783

Abstract

We present a non-linear non-homogeneous fitness-complexity algorithm where the presence of non homogeneous terms guarantees 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 method is parameter free. This new algorithm reproduces the findings of the original algorithm proposed by Tacchella et al. [1], and allows for an approximate analytic solution in case of actual binarized RCA matrices. This solution discloses a deep connection with the network theory of bipartite graphs. We define the new quantity of “country net-efficiency” quantifying how a country efficiently invests in capabilities able to generate innovative high quality products. Eventually, we demonstrate analytically the local convergence of the algorithm.

Subject Areas

economic complexity; non-linear map; Bipartite networks; network theory

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