In an interview that appeared in La Repubblica a few days ago, the President of the Enrico Fermi Research Center, Luciano Pietronero, explained how big data and artificial intelligence can help Europe evaluate Recovery Fund projects.
This is Economic Fitness and Complexity, a methodology developed by physicists from Sapienza University and the Enrico Fermi Research Center, which allows to measure the health of a country and predict its development capabilities.
Since 3 years this method has been adopted by the World Bank in Washington and now it will be used also by the European Commission in order to evaluate the Recovery Fund projects.
How did Pietronero’s team manage to combine the use of big data and artificial intelligence to create a more reliable method of defining countries?
“To analyze a country you usually take 100 indicators: the economy, pollution, road network, education, finance and so on, collecting a vast set of data,” Pietronero says.
“But data alone is not enough, because when there are so many of them, they also create so much confusion that makes forecasting difficult. So we decided to do a fairly original operation within big data, that is, we reduce them to look for the essential ones and avoid the discretion of the 100 parameters.”
So, Pietronero and his team decided to focus on the products and services that a country is capable of making.
Taking the iPhone as an example, the ability to produce it also provides information on education levels, jobs, IT, road networks and more.
“The main assumption of Economic Fitness is that a country’s success is given by an indicator that is based on diversification (how many different things it produces) weighted by the complexity of the product (which tells how much economic return it will have).”
To learn more about EFC, how it is applied, what it tells us about Italy and our future click on the link to read the full interview conducted by Marco Pratellesi with Luciano Pietronero!