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Integrating services in the economic fitness approach

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  • Zaccaria,Andrea
  • Mishra,Saurabh
  • Cader,Masud Z.
  • Pietronero,Luciano

Abstract

Economic Complexity is a set of network-based and algorithmic methods for the study of economic development and competitiveness. In this framework, Economic Fitness is an innovative approach that improves the mathematical and conceptual scheme. For convenience, these methods were originally conceived on trade in goods. This paper extends the Economic Fitness methodology to include a trade in services element to yield a universal matrix of world trade and thus provide a more complete picture of a country's development and global competitiveness. The paper applies two algorithms to the universal trade in goods and services matrix to contrast country competitiveness and change in complexity and diversification when services are added to the traditional goods-only matrix. The results show that (i) the competitiveness of many countries was previously over- or underestimated, that is, many countries gain or lose positions in the ranking of economic fitness when services trade is considered alongside goods; and (ii) complex services tend to cluster with complex manufacturing, suggesting a common capabilities structure. These findings show how developing complex services aids diversification strategies for developing countries.

Suggested Citation

  • Zaccaria,Andrea & Mishra,Saurabh & Cader,Masud Z. & Pietronero,Luciano, 2018. "Integrating services in the economic fitness approach," Policy Research Working Paper Series 8485, The World Bank.
  • Handle: RePEc:wbk:wbrwps:8485
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    Cited by:

    1. Blázquez, Leticia & Díaz-Mora, Carmen & González-Díaz, Belén, 2023. "Hubs of embodied business services in a GVC world," International Economics, Elsevier, vol. 174(C), pages 28-43.
    2. Angelica Sbardella & Andrea Zaccaria & Luciano Pietronero & Pasquale Scaramozzino, 2021. "Behind the Italian Regional Divide: An Economic Fitness and Complexity Perspective," LEM Papers Series 2021/30, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    3. Castañeda, Gonzalo & Pietronero, Luciano & Romero-Padilla, Juan & Zaccaria, Andrea, 2022. "The complex dynamic of growth: Fitness and the different patterns of economic activity in the medium and long terms," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 231-246.
    4. Ding Nan & Pomi Shahbaz & Shamsheer ul Haq & Muhammad Nadeem & Muhammad Imran, 2023. "The Economies’ Ability to Produce Diversified and Complex Goods to Meet the Global Competition: Role of Gross Value Chain, Institutional Quality, and Human Capital," Sustainability, MDPI, vol. 15(8), pages 1-17, April.
    5. Tacchella, Andrea & Zaccaria, Andrea & Miccheli, Marco & Pietronero, Luciano, 2023. "Relatedness in the era of machine learning," Chaos, Solitons & Fractals, Elsevier, vol. 176(C).
    6. Ye, Yucheng & Xu, Shuqi & Mariani, Manuel Sebastian & Lü, Linyuan, 2022. "Forecasting countries' gross domestic product from patent data," Chaos, Solitons & Fractals, Elsevier, vol. 160(C).
    7. Saurabh Mishra & Robert Koopman & Giuditta De-Prato & Anand Rao & Israel Osorio-Rodarte & Julie Kim & Nikola Spatafora & Keith Strier & Andrea Zaccaria, 2021. "AI Specialization for Pathways of Economic Diversification," Papers 2103.11042, arXiv.org.

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