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Optimizing economic complexity

Author

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  • Stojkoski, Viktor
  • Hidalgo, César A.

Abstract

Efforts to apply economic complexity to identify diversification opportunities often rely on diagrams comparing the relatedness and complexity of products, technologies, or industries. Yet, the use of these diagrams, is not based on empirical or theoretical evidence supporting some notion of optimality. Here, we introduce an optimization-based framework that identifies diversification opportunities by minimizing a cost function capturing the constraints imposed by an economy's pattern of specialization. We show that the resulting portfolios often differ from those implied by relatedness–complexity diagrams, providing a target-oriented optimization layer to the economic complexity toolkit.

Suggested Citation

  • Stojkoski, Viktor & Hidalgo, César A., 2026. "Optimizing economic complexity," Research Policy, Elsevier, vol. 55(4).
    • Handle: RePEc:eee:respol:v:55:y:2026:i:4:s0048733326000454
    DOI: 10.1016/j.respol.2026.105454
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    Cited by:

    1. is not listed on IDEAS
    2. Mitra, Alessio, 2025. "Where to Grow: Mapping Industrial Opportunities in the EU with Product Complexity, Relatedness, and Enabling Conditions," Single Market Economics Papers WP2025/44, Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (European Commission), Chief Economist Team.
    3. Benjamin Leroy & Davi Marim & El Ghali Benjelloun & Arthur Rozan Debeaurain & Jean-Michel Dalle, 2026. "The Geoeconomics of Venture Capital An Economic Complexity Approach to Emerging Technological Sovereignty," Papers 2604.09187, arXiv.org.

    More about this item

    Keywords

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    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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