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Entropic measure unveils country competitiveness and product specialization in the World trade web

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  • Gianluca Teza
  • Michele Caraglio
  • Attilio L. Stella

Abstract

We show how the Shannon entropy function can be used as a basis to set up complexity measures weighting the economic efficiency of countries and the specialization of products beyond bare diversification. This entropy function guarantees the existence of a fixed point which is rapidly reached by an iterative scheme converging to our self-consistent measures. Our approach naturally allows to decompose into inter-sectorial and intra-sectorial contributions the country competitivity measure if products are partitioned into larger categories. Besides outlining the technical features and advantages of the method, we describe a wide range of results arising from the analysis of the obtained rankings and we benchmark these observations against those established with other economical parameters. These comparisons allow to partition countries and products into various main typologies, with well-revealed characterizing features. Our methods have wide applicability to general problems of ranking in bipartite networks.

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  • Gianluca Teza & Michele Caraglio & Attilio L. Stella, 2021. "Entropic measure unveils country competitiveness and product specialization in the World trade web," Papers 2106.01936, arXiv.org.
    • Handle: RePEc:arx:papers:2106.01936
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    References listed on IDEAS

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    6. Michele Caraglio & Fulvio Baldovin & Attilio L. Stella, 2016. "Export dynamics as an optimal growth problem in the network of global economy," Papers 1609.04956, arXiv.org.
    7. Kemp-Benedict, Eric, 2014. "An interpretation and critique of the Method of Reflections," MPRA Paper 60705, University Library of Munich, Germany.
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    Cited by:

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    2. Gamarra, A.R. & Banacloche, S. & Lechon, Y. & del Río, P., 2023. "Assessing the sustainability impacts of concentrated solar power deployment in Europe in the context of global value chains," Renewable and Sustainable Energy Reviews, Elsevier, vol. 171(C).
    3. Alexander Schiersch & Irene Bertschek & Thomas Niebel, 2023. "Diversify or Not? – The Link between Global Sourcing of ICT Goods and Firm Performance," Discussion Papers of DIW Berlin 2043, DIW Berlin, German Institute for Economic Research.
    4. Carlo Bottai & Jacopo Di Iorio & Martina Iori, 2024. "Reinterpreting Economic Complexity: A co-clustering approach," Papers 2406.16199, arXiv.org.

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