Complexity Economics

Is Europe Heading For Long-Term Stagnation?

bigstock-Isometric-Europa-Crisis-32567831Recent news (August, 2014) speaks of slowing economy in Germany and of France, where economy has come to a virtual standstill. Our complexity and resilience analysis of the Eurozone and its member states shows, moreover, that the  Eurozone, seen as a system, is not out of the crisis yet. In actual fact, complexity, which measures the “vitality” of a system, is showing a tendency to shrink. While this remains to be confirmed over the next two-three quarters, this is not a good omen. The figure below illustrates the evolution of complexity of the 15 core EU economies, as well of the 13 members from Central and Eastern Europe.

EU_Q1014The evolution of resilience is showing a very similar trend. Central European economies present, once again, a more fragile situation.

EU_R_Q1014The evolution of the complexity of Germany, which has been enjoying a constant upward trend since 2010, is pointing to a totally new situation. Again, the evolution over the new few quarters will confirm if this is indeed a tendency or a local discontinuity. This situation is not surprising. The resilience of the German economy has been relatively low (substantially lower, for example, than that of Italy). One must keep in mind that high performance does not necessarily imply high resilience. An economy can perform well but, at the same time, be fragile, with the ability to suddenly produce surprising behavior.

Germany_Q12014

The interactive Business Structure Maps of all the EU 28 member states may be navigated here.

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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