Tunable resource allocation dynamics for interpreting economic complexity

Abstract

A lot of effort has been devoted to network structural interpretations of the economic complexity which can affect the level of economic growth and the activities of economic entities, although it remains unknown how network dynamical interpretations on which the economic complexity index operates affects its performance. Here, we regard export trade flows as the dynamics of resource allocation, and design a tunable resource allocation (TRA) process for interpreting economic complexity. The TRA could degrade into the classical economic complexity index (ECI) when the tunable parameter equals zero. We apply the TRA dynamics to the perfectly nested triangular matrix and the real country-product bipartite network from the world trade data to interpret economic complexity respectively. The parametric interpretations provide conceptual descriptions of the economic complexity index, shedding new light on a pattern of specialization of resource allocation, and the fluctuation of the economic complexity in countries and products. Moreover, the relationship of economic complexity between countries and products in the framework of TRA reveals that higher-ECI countries usually specialize in higher-ECI products while products not so as to countries, and the correlation strength varies with tunable parameters.