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The development pathways of nations: the heterogeneous dynamics of economic complexity

3 February 2016
San Francesco - Via della Quarquonia 1 (Classroom 1 )
In 1960 there were 17 countries with a GDP per capita less than 100 USD and the poorest-richest income ratio among these 17 countries was approximately 2. In 2010 this ratio among the same 17 countries was 100: 50 times larger. How can so similar initial income conditions lead to so different and heterogeneous results? How is it possible to explain the great divergence of developed countries in the last two centuries? What makes a poor country become rich? Recent results of a new branch - Economic Complexity - set basis for a framework to interpret and explain the extreme heterogeneity of the dynamics of development of nations. The idea behind the concept of Economic Complexity is to use the output of a country to determine how fertile the economic system is. In other words, to go from the observable exported products to a synthetic estimate (fitness) of the level of endowments present in the country, that automatically takes their relationships into account (see Refs. [1-2,5]). We will discuss the main results and achievements of Economic Complexity and we will discuss how the World Trade Web can provide information to develop a fundamental analysis for macro economic outlook of countries. As an example of them, the metrics for country intangibles allows for quantifying the hidden growth potential of countries by comparing it with money-based figures such as the GDP per capita [3-4]. The analysis of the economic evolution in the plane defined by fitness and GDP per capita pinpoints strongly heterogeneous patterns of evolution and allows to cast economic forecast into the framework of forecasting the evolution of a dynamical system as in the case of weather dynamics. We also observe a strong heterogeneity in the predictability of the economic dynamics. In such a framework, the usual tool used in Economics (i.e regressions) is no more the appropriate one to deal with such a heterogeneous scenario and new concepts, borrowed from dynamical systems theory, are needed.
Cristelli, Matthieu