An Explanatory Model of the "S" Curve between Export Diversity and Economic Size of Countries

Product diversity is another important but seldom studied indicator in economics. It is observed that rich countries can not only produce more amounts but also kinds of goods or services. This dependence between economic diversity and size of countries can be concluded as an S-shaped relationship between export products categories and logarithm of GDP for all countries as shown by our previous studies of international trade data. However this empirical phenomenon lacks of explanations. This paper puts forward an explanatory model to "S" curves. A three layers network is designed to depict the mapping between countries and products in which the nodes in the first, second and third layers stand for countries, abilities and products respectively. Therefore, the S-shaped relationship is explained as the saturation effects in the mapping between abilities and products. Although more elements or abilities can be possessed by large countries, the kinds of different products are limited by the sparse connections between abilities and products.