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The new paradigm of economic complexity

Balland, P-A; Broekel, T; Diodato, D; Giuliani, E; Hausmann, R; O'Clery, N; Rigby, D; (2022) The new paradigm of economic complexity. Research Policy , 51 (3) , Article 104450. 10.1016/j.respol.2021.104450. Green open access

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Abstract

Economic complexity offers a potentially powerful paradigm to understand key societal issues and challenges of our time. The underlying idea is that growth, development, technological change, income inequality, spatial disparities, and resilience are the visible outcomes of hidden systemic interactions. The study of economic complexity seeks to understand the structure of these interactions and how they shape various socioeconomic processes. This emerging field relies heavily on big data and machine learning techniques. This brief introduction to economic complexity has three aims. The first is to summarize key theoretical foundations and principles of economic complexity. The second is to briefly review the tools and metrics developed in the economic complexity literature that exploit information encoded in the structure of the economy to find new empirical patterns. The final aim is to highlight the insights from economic complexity to improve prediction and political decision-making. Institutions including the World Bank, the European Commission, the World Economic Forum, the OECD, and a range of national and regional organizations have begun to embrace the principles of economic complexity and its analytical framework. We discuss policy implications of this field, in particular the usefulness of building recommendation systems for major public investment decisions in a complex world.

Type: Article
Title: The new paradigm of economic complexity
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.respol.2021.104450
Publisher version: https://doi.org/10.1016/j.respol.2021.104450
Language: English
Additional information: © 2021 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
Keywords: Economic complexity, Complex systems, Innovation, Policy, Geography
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL BEAMS
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment
UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Centre for Advanced Spatial Analysis
URI: https://discovery.ucl.ac.uk/id/eprint/10141472
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