Stojkoski, Viktor and Hidalgo, Cesar Augusto (2025) Optimizing Economic Complexity. TSE Working Paper, n. 24-1623, Toulouse

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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 a method to identify diversification opportunities based on the minimization of a cost function that captures the constraints imposed by an economy’s pattern of specialization and show that this ECI optimization algorithm produces recommendations that are substantially different from those obtained using relatedness-complexity diagrams. This method advances the use of economic complexity methods to explore questions of strategic diversification.

Item Type: Monograph (Working Paper)
Language: English
Date: March 2025
Place of Publication: Toulouse
Uncontrolled Keywords: economic complexity, economic development, policy
JEL Classification: C61 - Optimization Techniques; Programming Models; Dynamic Analysis
O11 - Macroeconomic Analyses of Economic Development
O25 - Industrial Policy
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse Capitole
Site: UT1
Date Deposited: 14 Mar 2025 07:55
Last Modified: 14 Mar 2025 07:55
OAI Identifier: oai:tse-fr.eu:130425
URI: https://publications.ut-capitole.fr/id/eprint/50632
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