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

Benjamin Cakir, Isabelle Schluep, Philipp Aerni and Isa Cakir
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Benjamin Cakir: Institute of Mathematics, University of Zurich, Winterthurerstrasse 190, 8057 Zurich, Switzerland
Isabelle Schluep: Center for Corporate Responsibility and Sustainability CCRS, University of Zurich, Zähringerstrasse 24, 8001 Zurich, Switzerland
Philipp Aerni: Center for Corporate Responsibility and Sustainability CCRS, University of Zurich, Zähringerstrasse 24, 8001 Zurich, Switzerland
Isa Cakir: Center for Corporate Responsibility and Sustainability CCRS, University of Zurich, Zähringerstrasse 24, 8001 Zurich, Switzerland

Sustainability, 2021, vol. 13, issue 4, 1-16

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.

Keywords: amalgamation of export with import; coherency conditions; economic complexity; economic performance equivalent; eligibility; internal economic complexity; lie-trotter approach; normalization; random walk on a graph; Shannon entropy; sustainability (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:13:y:2021:i:4:p:2049-:d:499269

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