Optimal diversification strategies in the networks of related products and of related research areas

• Main Authors: Alshamsi, AamenaAli Ahmed Omran (Author), Portas Pinheiro, Flavio L (Author), Hidalgo Ramaciotti, Cesar A. (Author)
• Other Authors: Massachusetts Institute of Technology. Media Laboratory (Contributor), Program in Media Arts and Sciences (Massachusetts Institute of Technology) (Contributor)
• Format: Article
• Language: English
• Published: Springer Science and Business Media LLC, 2021-10-01T16:35:14Z.
• Subjects: Article
• Online Access: Get fulltext

 Countries and cities are likely to enter economic activities that are related to those that are already present in them. Yet, while these path dependencies are universally acknowledged, we lack an understanding of the diversification strategies that can optimally balance the development of related and unrelated activities. Here, we develop algorithms to identify the activities that are optimal to target at each time step. We find that the strategies that minimize the total time needed to diversify an economy target highly connected activities during a narrow and specific time window. We compare the strategies suggested by our model with the strategies followed by countries in the diversification of their exports and research activities, finding that countries follow strategies that are close to the ones suggested by the model. These findings add to our understanding of economic diversification and also to our general understanding of diffusion in networks.