The Quantitative Comparative Economics: indices of similarity to economic systems

Ali Zeytoon-Nejad ()
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Ali Zeytoon-Nejad: Wake Forest University

International Economics and Economic Policy, 2025, vol. 22, issue 3, No 4, 35 pages

Abstract: Abstract This paper presents a novel quantitative approach for comparative economic studies, addressing limitations in current classification methods. Conventional approaches in comparative economics often rely on ad hoc and categorical classifications, leading to subjective judgments and disregarding the continuous nature of the spectrum of economic systems. These can result in subjectivity and significant information loss, particularly for countries with systems near categorical borders. To overcome these shortcomings, the present paper proposes distance-based indices for objective categorization, considering economic foundations and using hard data. Accordingly, the paper introduces institutional similarity indices—Capitalism Similarity Index (CapSI), Communism Similarity Index (ComSI), and Socialism Similarity Index (SocSI)—which reflect countries’ positions along the economic system continuum. These indices adhere to mathematical rigor and are grounded in the mathematical fields of real analysis, metric spaces, and distance functions. By classifying 135 countries and creating GIS maps, the practical applicability of the proposed approach is demonstrated. Results show a high explanatory power of the introduced indices, suggesting their beneficial usage in comparative economic studies. The paper advocates for their adoption due to their objectivity and ability to capture structural and institutional nuances without subjective judgments while also considering the continuous nature of the spectrum of economic systems.

Keywords: Quantitative Comparative Economics; Economic systems; Classification; Similarity index (search for similar items in EconPapers)
JEL-codes: C00 C43 P10 P20 P51 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10368-025-00665-9

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