Assessing Economic Complexity with Input-Output Based Measures

where i'Xi = t is the total system (gross) output and i'y is the system’s final demand flow
(with y representing the vector of sectoral final demands).

The Cycling Index (M9 - CYCI) is:

CYCI = b
t

where: b = ∑ (1--)Xj is the sum of the cycling flows, l_ii are the main diagonal elements of

j           l _jj

the Leontief inverse matrix and t was defined above.

A recent measure of input-output connectedness that can be used as an indicator of
economic complexity is the Average Path Length (unweighted or weighted) proposed in
Dietzenbacher et al. (2005) and Dietzenbacher and Romero (2007).

This measure is based on matrices L = (I-A)^-1 and H, with H being defined as:

H=1×A+2×A²+3×A³+...

Dietzenbacher and Romero (2007) show that:

H = L(L - I)

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