The Evolution of Competitiveness across Economic, Innovation and Knowledge production activities

Abstract

The evolution of economic and innovation systems at the national scale is shaped by a complex dynamics, the footprint of which is the nested structure of the activities in which different countries are competitive. Nestedness is a persistent feature across multiple kinds (layers) of activities related to the production of knowledge and goods: scientific research, technological innovation, industrial production and trade. We observe that in the layers of innovation and trade the competitiveness of countries correlates unambiguously with their diversification, while the science layer displays some peculiar feature. The evolution of scientific domains leads to an increasingly modular structure, in which the most developed nations become less competitive in the less advanced scientific domains, where they are replaced by the emerging countries. This observation is in line with a capability-based view of the evolution of economic systems, but with a slight twist. Indeed, while the accumulation of specific know-how and skills is a fundamental step towards development, resource constraints force countries to acquire competitiveness in the more complex research fields at the price of losing ground in more basic, albeit less visible (or more crowded), fields. This tendency towards a relatively specialized basket of capabilities leads to a trade-off between the need to diversify in order to evolve and the need to allocate resources efficiently. Collaborative patterns among developed nations reduce the necessity to be competitive in the less sophisticated fields, freeing resources for the more complex domains.