Amalgamation of Export with Import Information: The Economic Complexity Index as a Coherent Driver of Sustainability

Abstract

Countries that achieve economic complexity in a holistic way are well-prepared to respond to external shocks through internal processes that may also improve their resilience. This article suggests that the Economic Complexity Index (ECI) can capture this ‘resilience dimension’ of complex economies and assesses their contribution to sustainable change through the amalgamation of export and import information. This novel methodological approach incorporates import information by applying amalgamation on a pre S-Level, which is based on the Lie-Trotter methodology, inducing a Random Walk on a Graph. In the empirical part, this procedure is examined. It shows that the ECI ranking may not always reflect the underlying internal economic complexity of a country, and with it, the country’s resilience and contribution to sustainable change. The novel approach is to some extent comparable with the degree of eligibility criteria of the original ECI and consistent with the organic evolutionary character of complex economies. After translating the ECI framework into its stochastic counterpart, the proofs of its interpretation in statistic and probabilistic terms, and its relationship to the Shannon Entropy are conducted. Coherency conditions of sustainability as further eligibility criteria are formulated and the degree of coherency of the ECI is investigated. In view of the challenges related to data preparation, we suggest applying the approach to a broader set of data including import information in order to gain additional insights in a country’s internal economic complexity and resilience.

The Intrinsic Links of Economic Complexity with Sustainability Dimensions: A Systematic Review and Agenda for Future Research

“…According to Aerni [50], the United Nations Sustainable Development Goals (SDGs) can harness economic complexity to explore potential pathways toward sustainable and inclusive economic growth. Furthermore, in accordance with Cakir et al [51], countries that achieve high levels of economic complexity (meaning a high level of diversity in productive capabilities and a low level of ubiquity products that reflect a kind of sophistication) in a holistic manner are well equipped to respond to external shocks through internal processes that can also impact their future export structure and sustainability (in terms of resilience). This helps them enhance not only their economic complexity but also their sustainability, thereby enabling them to reconcile economic growth with environmental and social concerns.…”

Decentralized Economic Complexity in Switzerland and Its Contribution to Inclusive and Sustainable Change

“…In this paper, we look at the rare case where migrants actually move from poorly connected large urban areas in low-income countries to highly connected small towns in rather rural areas in high-income countries. This is the case in the federalist system of Switzerland where economic regions outside the major urban population centers reveal an unexpectedly high degree of "internal" [6] economic complexity combined with an advanced integration into global business networks. By comparing the economic ecosystem of the town of Monthey, canton of Valais, in the French-speaking part of Switzerland, with the economic ecosystem of the canton of Solothurn in the German-speaking part of Switzerland, we illustrate the importance of the historical, institutional and geographical context in which such diverse and complex economic ecosystems in the countryside emerge and how they thrive through a constructive type of mutualism between local knowledgebased and service-oriented small and medium-sized enterprises (SMEs) and the larger export-oriented companies in the region, between local residents and international migrants and between white and blue collar workers.…”

Sustainable development goals for the coastal territories of the Baltic Sea Region

“…When determining the key industries, the development of which can contribute to the sustainable development of a territory, it is also advisable to focus on the strategic areas identified by the economic complexity analysis [47][48][49][50]. In the BSR, such an analysis was carried out, for example, for the Kaliningrad region for the period 2015-2017 [51].…”