The complex dynamics of products and its asymptotic properties

TL;DR

This paper models the global export dynamics using economic complexity and introduces a scalar field approach to explain product movements and market configurations over time.

Contribution

It develops a quantitative model linking product dynamics to market competition, revealing asymptotic configurations based on product complexity.

Findings

Products tend to move towards high-competition areas in the Complexity-logPRODY plane.

Most products' market composition converges to a characteristic, complexity-dependent configuration.

The model explains product motion as driven by a potential-like scalar field.

Abstract

We analyse global export data within the Economic Complexity framework. We couple the new economic dimension Complexity, which captures how sophisticated products are, with an index called logPRODY, a measure of the income of the respective exporters. Products' aggregate motion is treated as a 2-dimensional dynamical system in the Complexity-logPRODY plane. We find that this motion can be explained by a quantitative model involving the competition on the markets, that can be mapped as a scalar field on the Complexity-logPRODY plane and acts in a way akin to a potential. This explains the movement of products towards areas of the plane in which the competition is higher. We analyse market composition in more detail, finding that for most products it tends, over time, to a characteristic configuration, which depends on the Complexity of the products. This market configuration, which we called asymptotic, is characterized by higher levels of competition.