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Brummitt CD, Huremović K, Pin P, et al. Contagious disruptions and complexity traps in economic development. Nat Hum Behav. 2017;1(9):665-672doi: 10.1038/s41562-017-0190-6.
Brummitt, C. D., Huremović, K., Pin, P., Bonds, M. H., & Vega-Redondo, F. (2017). Contagious disruptions and complexity traps in economic development. Nature human behaviour, 1(9), 665-672. https://doi.org/10.1038/s41562-017-0190-6
Brummitt, Charles D, et al. "Contagious disruptions and complexity traps in economic development." Nature human behaviour vol. 1,9 (2017): 665-672. doi: https://doi.org/10.1038/s41562-017-0190-6
Brummitt CD, Huremović K, Pin P, Bonds MH, Vega-Redondo F. Contagious disruptions and complexity traps in economic development. Nat Hum Behav. 2017 Sep;1(9):665-672. doi: 10.1038/s41562-017-0190-6. Epub 2017 Sep 04. PMID: 31024143.
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Nat Hum Behav. 2017 Sep;1(9):665-672. doi: 10.1038/s41562-017-0190-6. Epub 2017 Sep 04.

Contagious disruptions and complexity traps in economic development.

Nature human behaviour

Charles D Brummitt, Kenan Huremović, Paolo Pin, Matthew H Bonds, Fernando Vega-Redondo

Affiliations

  1. Center for the Management of Systemic Risk, Columbia University, New York, NY, 10027, USA.
  2. Department of Global Health and Social Medicine, Harvard Medical School, Boston, MA, 02115, USA.
  3. IMT School for Advanced Studies, Piazza San Francesco, 19, 55100, Lucca, Italy.
  4. Aix-Marseille School of Economics, Aix-Marseille University, 5 Boulevard Maurice Bourdet, 13001, Marseille, France.
  5. Department of Decision Sciences, Innocenzo Gasparini Institute for Economic Research, and Bocconi Institute for Data Science and Analytics, Università Bocconi, Via Roentgen 1, Milano, 20136, Italy.
  6. Department of Global Health and Social Medicine, Harvard Medical School, Boston, MA, 02115, USA. [email protected].
  7. School of Medicine, Stanford University, Stanford, CA, 94305, USA. [email protected].

PMID: 31024143 DOI: 10.1038/s41562-017-0190-6

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.

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