The framework of Economic Complexity (EC) describes economic systems as bipartite networks where economic actors are connected to the economic activities (e.g. countries, regions) in which they are competitive (e.g. exported products, patented technologies). The topological features of these networks can be leveraged to build centrality measures, that are shown to be predictive of future economic growth, and to predict future actor-activities links. The latter prediction leverages what is called the principle of relatedness: patterns of co-location of economic activities reveal similarity among them, and economic actors are more likely to engage in new activities that are similar to those to which they are already connected.
These bipartite networks are shown to exhibit various degrees of nestedness, and this topological feature plays an important role not only in shaping the mathematical form of the economic complexity metrics, but also in providing a conceptual connection with different fields, such as ecology.
When using the EC framework we implicitly define economic actors as entities at a fixed geographical or organizational scale (e.g. countries, regions, cities), but the question of how these scales interact is largely unaddressed: does nestedness break down at some scale? How is it recovered under aggregation? How do economic complexity metrics change by partition and aggregation of territories? Are there effects that emerge only at higher scales? When does the principle of relatedness break down? Does it have an optimal scale?
Here we try to address some of these questions by leveraging fine-grained data on Italian firms, with the long-term goal of making the framework able to provide better predictions, more actionable insights, and to improve our theoretical understanding of the role of geography in shaping the observed patterns of diversification and nestedness.
About the speaker:
Andrea Tacchella is lead researcher at the Enrico Fermi Research Center (CREF) in Rome, where he studies economic complexity and innovation dynamics. Previously he has worked at the Joint Research Centre of the European Commission and has been a consultant for several national and international policy making institutions, such as the Italian Ministry of Foreign Affairs, the World Bank and the European Bank for Reconstruction and Development.
