SCEN 3223:30 PM.Thursday, September 10, 2009.Colloquium

Growth Networks
Raja Kali and Javier Reyes, department of economics, University of Arkansas

Abstract: Is there a way to kindle acceleration in the economic growth rate of a country? What role do trade and comparative advantage play in this process? These are among the most enduring and important questions in economics. This research project aims to use a novel, network-based approach to international trade to make progress in decoding the mystery of growth acceleration.

One of the general results of the literature in complex networks is that high performance networks in many settings (biological, technological, social, economic) have the "small world" property. In other words, in several contexts, the small world seems to be an "optimal" topology. A small world is a network whose topology combines high clustering among nodes with high connectivity (short path length) across nodes. Due to high clustering, such networks are likely to have strong spillovers between nodes, and short path length provides the potential for long range leaps across the network. Both features are advantageous in the context of economic development and growth. Could it be that the key to growth acceleration is whether the pattern of product specialization of a country develops a "small world" topology before the take-off? This could come about because product space and the pattern of product specialization of a country, which are both evolving over time, overlap so as to create the conditions for a small world. If true, then this implies that the country's location in product space and its pattern of product specialization matter for its likelihood of experiencing a growth acceleration. Our research aims to marshal evidence to examine this insight.