How production networks amplify economic growth
[1];
[3];
[4];
[5]
- Harvard University, Cambridge, MA (United States); Massachusetts Institute of Technology (MIT), Cambridge, MA (United States); Complexity Science Hub Vienna (Austria)
- University of Oxford (United Kingdom)
- Los Alamos National Laboratory (LANL), Los Alamos, NM (United States)
- University of Cambridge (United Kingdom); The Alan Turing Institute, London (United Kingdom); Center for Economic and Policy Research, London (United Kingdom)
- University of Oxford (United Kingdom); Santa Fe Institute, NM (United States)
Technological improvement is the most important cause of long-term economic growth. In standard growth models, technology is treated in the aggregate, but an economy can also be viewed as a network in which producers buy goods, convert them to new goods, and sell the production to households or other producers. We develop predictions for how this network amplifies the effects of technological improvements as they propagate along chains of production, showing that longer production chains for an industry bias it toward faster price reduction and that longer production chains for a country bias it toward faster growth. These predictions are in good agreement with data from the World Input Output Database and improve with the passage of time. The results show that production chains play a major role in shaping the long-term evolution of prices, output growth, and structural change.
- Research Organization:
- Los Alamos National Laboratory (LANL), Los Alamos, NM (United States)
- Sponsoring Organization:
- USDOE; National Science Foundation (NSF); European Commission; European Research Council Consolidator
- Grant/Contract Number:
- 89233218CNA000001
- OSTI ID:
- 2470553
- Journal Information:
- Proceedings of the National Academy of Sciences of the United States of America, Journal Name: Proceedings of the National Academy of Sciences of the United States of America Journal Issue: 1 Vol. 119; ISSN 0027-8424
- Publisher:
- National Academy of SciencesCopyright Statement
- Country of Publication:
- United States
- Language:
- English
Similar Records
Applications of input--output analysis to energy problems
Study to develop statewide and county-level economic projections. Volume 1. California county economic forecasts. Final report