Title: The role of complex analysis in modeling economic growth,
Abstract: Development and growth are complex and tumultuous processes. Modern economic
growth theories identify some key determinants of economic growth. However, the
relative importance of the determinants remains unknown, and additional
variables may help clarify the directions and dimensions of the interactions.
The novel stream of literature on economic complexity goes beyond aggregate
measures of productive inputs, and considers instead a more granular and
structural view of the productive possibilities of countries, i.e. their
capabilities. Different endowments of capabilities are crucial ingredients in
explaining differences in economic performances. In this paper we employ
economic fitness, a measure of productive capabilities obtained through complex
network techniques. Focusing on the combined roles of fitness and some more
traditional drivers of growth, we build a bridge between economic growth
theories and the economic complexity literature. Our findings, in agreement
with other recent empirical studies, show that fitness plays a crucial role in
fostering economic growth and, when it is included in the analysis, can be
either complementary to traditional drivers of growth or can completely
overshadow them.