Productive Ecosystems and the Arrow of Development
11 March 2021
A new paper in Nature Communications from Dr Neave O'Clery and co-authors
What drives economic development? Or more precisely, what constrains economic development?
An emerging consensus on this question surrounds the role of locally embedded productive capabilities, and the idea that countries build on their existing capabilities to move into new economic activities.
The authors, Neave O'Clery (UCL), Muhammed A. Yildirim (Harvard) and Ricardo Hausmann (Harvard) develop a mathematical model to capture the directed dynamical process of capability accumulation and product diversification of countries.
They use this model to construct a directed network of products, the Eco Space. The authors uncover a modular structure in the network, and show that low- and middle income countries move from product clusters dominated by few capability products to advanced (many capability) products over time. Finally, they show that their network model is predictive of product appearances in countries over time.