Economic complexity theory and applications

Résumé

Economic complexity methods have become popular tools in economic geography, international development, and innovation studies. Here, I review economic complexity theory and applications, with a particular focus on two streams of research: the literature on relatedness, which focuses on the evolution of specialization patterns, and the literature on metrics of economic complexity, which uses dimensionality reduction techniques to create metrics of economic sophistication that are predictive of variations in income, economic growth, emissions, and income inequality. I will conclude by presenting examples of how these tools are being used in economic development planning and strategy.