Equivalence between the Fitness-Complexity and the Sinkhorn-Knopp algorithms
arXiv:2212.12356 · doi:10.1088/2632-072X/ad2697
Abstract
We uncover the connection between the Fitness-Complexity algorithm, developed in the economic complexity field, and the Sinkhorn-Knopp algorithm, widely used in diverse domains ranging from computer science and mathematics to economics. Despite minor formal differences between the two methods, both converge to the same fixed-point solution up to normalization. The discovered connection allows us to derive a rigorous interpretation of the Fitness and the Complexity metrics as the potentials of a suitable energy function. Under this interpretation, high-energy products are unfeasible for low-fitness countries, which explains why the algorithm is effective at displaying nested patterns in bipartite networks. We also show that the proposed interpretation reveals the scale invariance of the Fitness-Complexity algorithm, which has practical implications for the algorithm's implementation in different datasets. Further, analysis of empirical trade data under the new perspective reveals three categories of countries that might benefit from different development strategies.
arXiv comment14 pages, 4 figures
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