What will be the growth of the Gross Domestic Product (GDP) or the competitiveness of China, United States, and Vietnam in the next 3, 5 or 10 years? Despite this kind of questions has a large societal impact and an extreme value for economic policy making, providing a scientific basis for economic predictability is still a very challenging problem. Recent results of a new branch—Economic Complexity—have set the basis for a framework to approach such a challenge and to provide new perspectives to cast economic prediction into the conceptual scheme of forecasting the evolution of a dynamical system as in the case of weather dynamics. We argue that a recently introduced non-monetary metrics for country competitiveness (fitness) allows for quantifying the hidden growth potential of countries by the means of the comparison of this measure for intangible assets with monetary figures, such as GDP per capita. This comparison defines the fitness-income plane where we observe that country dynamics presents strongly heterogeneous patterns of evolution. The flow in some zones is found to be laminar while in others a chaotic behavior is instead observed. These two regimes correspond to very different predictability features for the evolution of countries: in the former regime, we find strong predictable pattern while the latter scenario exhibits a very low predictability. In such a framework, regressions, the usual tool used in economics, are no more the appropriate strategy to deal with such a heterogeneous scenario and new concepts, borrowed from dynamical systems theory, are mandatory. We therefore propose a data-driven method—the selective predictability scheme—in which we adopt a strategy similar to the methods of analogues, firstly introduced by Lorenz, to assess future evolution of countries.

In this paper we analyze the bipartite network of countries and products from UN data on country production. We define the country-country and product-product projected networks and introduce a novel method of filtering information based on elements’ similarity. As a result we find that country clustering reveals unexpected socio-geographic links among the most competing countries. On the same footings the products clustering can be efficiently used for a bottom-up classification of produced goods. Furthermore we mathematically reformulate the “reflections method” introduced by Hidalgo and Hausmann as a fixpoint problem; such formulation highlights some conceptual weaknesses of the approach. To overcome such an issue, we introduce an alternative methodology (based on biased Markov chains) that allows to rank countries in a conceptually consistent way. Our analysis uncovers a strong non-linear interaction between the diversification of a country and the ubiquity of its products, thus suggesting the possible need of moving towards more efficient and direct non-linear fixpoint algorithms to rank countries and products in the global market.

We live in a computerized and networked society where many of our actions leave a digital trace and affect other people’s actions. This has lead to the emergence of a new data-driven research field: mathematical methods of computer science, statistical physics and sociometry provide insights on a wide range of disciplines ranging from social science to human mobility. A recent important discovery is that search engine traffic (i.e., the number of requests submitted by users to search engines on the www) can be used to track and, in some cases, to anticipate the dynamics of social phenomena. Successful examples include unemployment levels, car and home sales, and epidemics spreading. Few recent works applied this approach to stock prices and market sentiment. However, it remains unclear if trends in financial markets can be anticipated by the collective wisdom of on-line users on the web. Here we show that daily trading volumes of stocks traded in NASDAQ-100 are correlated with daily volumes of queries related to the same stocks. In particular, query volumes anticipate in many cases peaks of trading by one day or more. Our analysis is carried out on a unique dataset of queries, submitted to an important web search engine, which enable us to investigate also the user behavior. We show that the query volume dynamics emerges from the collective but seemingly uncoordinated activity of many users. These findings contribute to the debate on the identification of early warnings of financial systemic risk, based on the activity of users of the www.

Technical trading represents a class of investment strategies for Financial Markets based on the analysis of trends and recurrent patterns in price time series. According standard economical theories these strategies should not be used because they cannot be profitable. On the contrary, it is well-known that technical traders exist and operate on different time scales. In this paper we investigate if technical trading produces detectable signals in price time series and if some kind of memory effects are introduced in the price dynamics. In particular, we focus on a specific figure called supports and resistances. We first develop a criterion to detect the potential values of supports and resistances. Then we show that memory effects in the price dynamics are associated to these selected values. In fact we show that prices more likely re-bounce than cross these values. Such an effect is a quantitative evidence of the so-called self-fulfilling prophecy, that is the self-reinforcement of agents' belief and sentiment about future stock prices' behavior.

We identify an important correlation between skewness and kurtosis for a broad class of complex dynamic systems and present a specific analysis of earthquake and financial time series. Two regimes of non-Gaussianity can be identified: a parabolic one, which is common in various fields of physics, and a power law one, with exponent 4/3, which at the moment appears to be specific of earthquakes and financial markets. For this property we propose a model and an interpretation in terms of very rare events dominating the statistics independently on the nature of the events considered. The predicted scaling relation between skewness and kurtosis matches very well the experimental pattern of the second regime. Regarding price fluctuations, this situation characterizes a universal stylized fact.