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 and government failures-that systematically thwart the production process. To understand how these disruptions affect economic development, we modelled an evolving input-output network in which disruptions spread contagiously among optimizing agents. The key finding was that a poverty trap can emerge: agents adapt to frequent disruptions by producing simpler, less valuable goods, yet disruptions persist. Growing out of poverty requires that agents invest in buffers to disruptions. These buffers rise and then fall as the economy produces more complex goods, a prediction consistent with global patterns of input inventories. Large jumps in economic complexity can backfire. This result suggests why 'big push' policies can fail and it underscores the importance of reliability and gradual increases in technological complexity.

Contagious disruptions and complexity traps in economic development

Huremovic K.;
2017-01-01

Abstract

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 and government failures-that systematically thwart the production process. To understand how these disruptions affect economic development, we modelled an evolving input-output network in which disruptions spread contagiously among optimizing agents. The key finding was that a poverty trap can emerge: agents adapt to frequent disruptions by producing simpler, less valuable goods, yet disruptions persist. Growing out of poverty requires that agents invest in buffers to disruptions. These buffers rise and then fall as the economy produces more complex goods, a prediction consistent with global patterns of input inventories. Large jumps in economic complexity can backfire. This result suggests why 'big push' policies can fail and it underscores the importance of reliability and gradual increases in technological complexity.
File in questo prodotto:
File Dimensione Formato  
s41562-017-0190-6 (1).pdf

non disponibili

Tipologia: Versione Editoriale (PDF)
Licenza: Nessuna licenza
Dimensione 3.52 MB
Formato Adobe PDF
3.52 MB Adobe PDF   Visualizza/Apri   Richiedi una copia

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/20.500.11771/13517
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 9
social impact