From Innovation to Diversification: A Simple Competitive Model.

Area of Science:

• Economics
• Network Science
• Economic Complexity

Background:

• Limited understanding of the statistical features and historical evolution of export bipartite matrices (countries/products).
• The concept of a products network, a hierarchical forest modeling commodity formation and evolution, is crucial.

Purpose of the Study:

• To propose a simple dynamical model for the evolution of export matrices and product networks.
• To investigate how countries compete to expand their export capabilities through innovation and imitation.

Main Methods:

• Development of a dynamical model where countries interact within a product network.
• Modeling country export expansion via two strategies: innovation (new product nodes) and copying (existing product nodes).
• Simultaneous evolution of product network topology and country-product matrix driven by innovation.

Main Results:

• The model demonstrates how competition influences the structure of product networks.
• It illustrates the interplay between country-specific innovation and global product diffusion.
• The simultaneous evolution of network topology and export matrix is shown to be driven by innovation.

Conclusions:

• The proposed dynamical model offers insights into the co-evolution of export capabilities and product network structures.
• Country competition and innovation are key drivers in shaping global trade patterns.
• This framework advances the understanding of economic complexity and product diversification.