The Economic Fitness Approach

Macroeconomics deals with fundamental economics and the development of industry and services. Since this dynamics is smoother than financial fluctuations, one may think it should be easier to analyze and predict, but this is actually not the case. For example, the fantastic economic growth of China for the last 25 years has eluded most of the standard analyses which yearly, for the past twenty years, expected a drastic decrease for the growth of China GDP. On the basis of this and other severe problems, The Economist (Jan 9th, 2016) stated that "growth is devilishly hard to predict". This critical situation stimulated some of us to address Macroeconomics and the problem of growth from a novel perspective, strongly inspired by the concepts and methods of statistical physics and complexity theory.
Economic Fitness and Complexity (EFC) is a new field of research consisting of a radically new methodology. It describes economics as an evolutionary process of ecosystems made of industrial and financial technologies as well as infrastructures that are all globally interconnected. This approach offers new opportunities to constructively describe technological ecosystems, analyze their structures, understand their internal dynamics, as well as to introduce new metrics. It provides a new paradigm for a fundamental economic science based on data with a bottom-up approach.
A key feature of EFC is to go from "100 parameters" of the standard methods to "zero parameters" and obtain results which can be tested scientifically. This is done by focusing on the data in which the signal to noise ratio is optimal and developing iterative algorithms in the spirit, but other than Google. This leads to the identification of the industrial Fitness of countries and the Complexity of products. The dynamics in the new GDP-Fitness space leads to a completely new way for monitoring and forecasting. The same approach can then be applied to the scientific production and the technologies, so to open up the possibility of analyzing the core elements of the innovation process. All this provides a disciplined set of indicators that can be used for the industrial planning of countries and regions.
These groundbreaking ideas have already attracted the attention of leading scientific media such as Nature and Bloomberg Views. Recently the IFC-World Bank has tested this methodology, found it better than the standard analysis, and adopted it for the analysis of more than 50 countries.