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Article

An Eco-Systems Approach to constructing Economic Complexity Measures: Endogenization of the technological dimension using Lotka-Volterra equations

Advances in Complex Systems. 2019. Vol. 22. No. 1. P. 1850023-1-1850023-29.
Ivanova I., Strand Ø., Leydesdorff L.

Economic complexity measures have been constructed on the basis of bipartite country-product network data, but without paying attantion to the technological dimensions or manufacturing capabilities. In this study, we submit a Ternary Complexity Index (TCI), which explicitly incorporates technological knowledge as a third dimension, measured in terms of patents. Different from a complexity indicator based on the Triple Helix model (THCI) or a measure based on patents and countries (PatCI), TCI - products, countries and patents - can be modeled in terms of Lotka-Volterra equations and thus the further evolution of an innovation eco-system can be specified. We test the model using empirical data. The results of a regression analysis show that TCI improves on Hidalgo & Hausmann' (2009) and Tacchella’s et al. (2012)  complexity measures with respect to both ranking countries in terms of their complexity and in terms of the correlation with GDP per capita.