A Simple Combinatorial Model of World Economic History

A transformation network describes how one set of resources can be transformed into another via technological processes. Transformation networks in economics are useful because they can highlight areas for future innovations, both in terms of new products, new production techniques, or better efficiency. They also make it easy to detect areas where an economy might be fragile. In this paper, we use computational simulations to investigate how the density of a transformation n...

We show that world trade network datasets contain empirical evidence that the dynamics of innovation in the world economy follows indeed the concept of creative destruction, as proposed by J.A. Schumpeter more than half a century ago. National economies can be viewed as complex, evolving systems, driven by a stream of appearance and disappearance of goods and services. Products appear in bursts of creative cascades. We find that products systematically tend to co-appear, and ...

Social evolutionary theory seeks to explain increases in the scale and complexity of human societies, from origins to present. Over the course of the twentieth century, social evolutionary theory largely fell out of favor as a way of investigating human history, just as advances in complex systems science and computer science saw the emergence of powerful new conceptions of complex systems, and in particular new methods of measuring complexity. We propose that these advances ...

Technological improvement is the most important cause of long-term economic growth. We study the effects of technology improvement in the setting of a production network, in which each producer buys input goods and converts them to other goods, selling the product to households or other producers. We show how this network amplifies the effects of technological improvements as they propagate along chains of production. Longer production chains for an industry bias it towards f...

Poor economies not only produce less; they typically produce things that involve fewer inputs and fewer intermediate steps. Yet the supply chains of poor countries face more frequent disruptions---delivery failures, faulty parts, delays, power outages, theft, government failures---that systematically thwart the production process. To understand how these disruptions affect economic development, we model an evolving input--output network in which disruptions spread contagiousl...

Innovation is to organizations what evolution is to organisms: it is how organisations adapt to changes in the environment and improve. Governments, institutions and firms that innovate are more likely to prosper and stand the test of time; those that fail to do so fall behind their competitors and succumb to market and environmental change. Yet despite steady advances in our understanding of evolution, what drives innovation remains elusive. On the one hand, organizations in...

I explore the concept of growth being rooted in the recombination of existing technology as an explanation for the remarkable growth witnessed during the Industrial Revolution as it was recently proposed by Koppl et al.(2023). I adapt their combinatorial growth theory to assess its applicability in generating academic knowledge within universities and research institutions, particularly in the field of economics. The central question is whether significant combinatorial growt...

Economic transformation -- change in what an economy produces -- is foundational to development and rising standards of living. Our understanding of this process has been propelled recently by two branches of work in the field of economic complexity, one studying how economies diversify, the other how the complexity of an economy is expressed in the makeup of its output. However, the connection between these branches is not well understood, nor how they relate to a classic un...

Functional technical performance usually follows an exponential dependence on time but the rate of change (the exponent) varies greatly among technological domains. This paper presents a simple model that provides an explanatory foundation for these phenomena based upon the inventive design process. The model assumes that invention - novel and useful design- arises through probabilistic analogical transfers that combine existing knowledge by combining existing individual op...

We propose an extremely simple mathematical model that is shown to be able to account for more than 99 per cent of all the variation in economic and demographic macrodynamics of the world for almost two millennia of its history. This appears to suggest a novel approach to the formation of the general theory of social macroevolution.