Complexity Economics

Health of the EU Economy: Recovery or Stagnation

Our quarterly analysis of Eurostat’s macroeconomic data of the Eurozone for Q3 2013 has now been completed and published. The interactive Business Structure Maps of each member state may be navigated here.
Italy, together with the UK, Sweden and France have the highest resilience (approximately 80%), while Belgium, Ireland, and Spain score a low 60%.
It is interesting to note that when it comes to the entire region, there are clear indications of a slow but consistent recovery. The evolution of complexity (its increase) in the plot belows shows that clearly.
However, complexity remains dangerously close to critical complexity, denoting alarmingly high fragility. This means that the system is very much exposed and incapable of dealing with intense shocks, financial contagion or extreme events. Nevertheless, it is also evident how, based on the available data, we have hit the bottom around Q4 2011, i.e. approximately two years ago. As of today, the situation in terms of complexity is comparable to that of Q3 2010. In essence, overall situation of the Eurozone has not evolved over the last three years. This is in line with an evident lack of reforms and lack leadership at both EU and country level.
The evolution of resilience follows a similar trend and, although it is still alarmingly low.

Finally, it is interesting to notice how in terms of recovery the 15 core Eurozone states are outpacing the 13 new  member states.

While the crisis peaked in Western Europe in Q4 2007, it climaxed approximately one year later in Central and Eastern Europe. In terms of recovery things are different. While the EU15 group touched the bottom in Q1 2011, the EU13 did so in Q3 2012, i.e. 18 months later. What is also clear is that the complexity gradient (higher complexity means a more lively economy) in the case of the EU13 group is substantially lower than that of the EU15. This means that, based on the currently available data, recovery in Central and Eastern Europe will be significantly slower.                             

Established originally in 2005 in the USA, Ontonix is a technology company headquartered in Como, Italy. The unusual technology and solutions developed by Ontonix focus on countering what most threatens safety, advanced products, critical infrastructures, or IT network security - the rapid growth of complexity. In 2007 the company received recognition by being selected as Gartner's Cool Vendor. What makes Ontonix different from all those companies and research centers who claim to manage complexity is that we have a complexity metric. This means that we MEASURE complexity. We detect anomalies in complex defense systems without using Machine Learning for one very good reason: our clients don’t have the luxury of multiple examples of failures necessary to teach software to recognize them. We identify anomalies without having seen them before. Sometimes, you must get it right the first and only time!

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