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Complexity of products: the effect of data regularisation

Author

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  • Orazio Angelini
  • Tiziana Di Matteo
Abstract
Among several developments, the field of Economic Complexity (EC) has notably seen the introduction of two new techniques. One is the Bootstrapped Selective Predictability Scheme (SPSb), which can provide quantitative forecasts of the Gross Domestic Product of countries. The other, Hidden Markov Model (HMM) regularisation, denoises the datasets typically employed in the literature. We contribute to EC along three different directions. First, we prove the convergence of the SPSb algorithm to a well-known statistical learning technique known as Nadaraya-Watson Kernel regression. The latter has significantly lower time complexity, produces deterministic results, and it is interchangeable with SPSb for the purpose of making predictions. Second, we study the effects of HMM regularization on the Product Complexity and logPRODY metrics, for which a model of time evolution has been recently proposed. We find confirmation for the original interpretation of the logPRODY model as describing the change in the global market structure of products with new insights allowing a new interpretation of the Complexity measure, for which we propose a modification. Third, we explore new effects of regularisation on the data. We find that it reduces noise, and observe for the first time that it increases nestedness in the export network adjacency matrix.

Suggested Citation

  • Orazio Angelini & Tiziana Di Matteo, 2018. "Complexity of products: the effect of data regularisation," Papers 1808.08249, arXiv.org, revised Oct 2018.
    • Handle: RePEc:arx:papers:1808.08249
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    References listed on IDEAS

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    Cited by:

    1. Angelini, Orazio & Gabrielli, Andrea & Tacchella, Andrea & Zaccaria, Andrea & Pietronero, Luciano & Di Matteo, T., 2024. "Forecasting the countries’ gross domestic product growth: The case of Technological Fitness," Chaos, Solitons & Fractals, Elsevier, vol. 184(C).
    2. Massimiliano Fessina & Giambattista Albora & Andrea Tacchella & Andrea Zaccaria, 2022. "Which products activate a product? An explainable machine learning approach," Papers 2212.03094, arXiv.org.

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