Capability Accumulation and Conditional Convergence: Towards a Dynamic Theory of Economic Complexity
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arXiv
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| Format: | Preprint |
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2025
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| _version_ | 1866917138814468096 |
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| author | Hidalgo, Cesar A. Stojkoski, Viktor |
| author_facet | Hidalgo, Cesar A. Stojkoski, Viktor |
| contents | We develop a dynamic model of economic complexity that endogenously generates a transition between unconditional and conditional convergence. In this model, convergence turns conditional as the capability intensity of activities rises. We solve the model analytically, deriving closed-form solutions for the boundary separating unconditional from conditional convergence and show that this model also explains the path-dependent diversification process known as the principle of relatedness. This model provides an explanation for transitions between conditional and unconditional convergence and path-dependent diversification. |
| format | Preprint |
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arxiv_https___arxiv_org_abs_2512_10672 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Capability Accumulation and Conditional Convergence: Towards a Dynamic Theory of Economic Complexity Hidalgo, Cesar A. Stojkoski, Viktor General Economics Economics We develop a dynamic model of economic complexity that endogenously generates a transition between unconditional and conditional convergence. In this model, convergence turns conditional as the capability intensity of activities rises. We solve the model analytically, deriving closed-form solutions for the boundary separating unconditional from conditional convergence and show that this model also explains the path-dependent diversification process known as the principle of relatedness. This model provides an explanation for transitions between conditional and unconditional convergence and path-dependent diversification. |
| title | Capability Accumulation and Conditional Convergence: Towards a Dynamic Theory of Economic Complexity |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2512.10672 |