COMPLEXITY

Ricardo Hausmann & J. Doyne Farmer on Evolving Technologies & Market Ecologies (EPE 03)

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May 21, 2022
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INSIGHT

Economic Complexity as Letters and Words

  • Countries' productive knowledge is like letters forming words, creating industries and products.
  • Complexity economics helps map how societies evolve by combining capabilities in an adjacent possible space.
INSIGHT

Production Networks as Ecologies

  • Production networks are ecological systems of specialists interacting at different trophic levels.
  • Deeper supply chains lead to faster industry improvement due to multiple innovation opportunities upstream.
INSIGHT

Inequality Linked to Complexity

  • Greater economic complexity means more diverse capabilities (letters) and less volatility.
  • Inequality arises mainly from diverse productivity levels, not just pie slicing; inclusion boosts complexity.
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