Maastricht Economic and social Research and  training centre on Innovation and Technology

 
I&T Weekly holiday break
I&T Weekly is taking a holiday break. We will be back on Friday, January 12, 2018 with a fresh selection of innovation and technology news. On behalf of the entire UNU-MERIT team, we wish our readers an excellent 2018!




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All headlines
  • France announces landmark ban on fossil fuel production
  • Extreme laser bursts may lead to practical nuclear fusion
  • Gene editing staves off deafness in mice
  • Integrated circuits could make quantum computers scalable
  • 'Water cloak' uses electromagnetic waves to eliminate turbulence
  • Cold cigarette lighter will power satellite
  • Why poor countries often stay poor – and how they can get rich
    It’s an old story. A rich country’s aid agency pours millions into a new industry in a poor country, in the hope of boosting its economy, but it never really works. The factory keeps getting shut down by blackouts or lack of spare parts. Raw materials don’t arrive; workers get sick; engineers emigrate. Now a new kind of mathematical model describing how such systems behave might help beat this 'poverty trap'.

    Applying the physics of networks and complexity to economic systems has shown that the key process in 'developing' from impoverished to industrialised is adopting more complex production, for example going from subsistence farming, to textiles, to electronics. But more complexity means managing more inputs, from raw materials to labour. The trouble is, in poor countries, supply chains can be unreliable.

    To work out how this affects the development of a country’s economy, researchers from Columbia University in New York have created an agent-based model (ABM): a set of mathematical equations that describe the behaviours and interactions of each component of the economy. Then they let it run to see what happened.

    In the model, companies and producers adapted to supply disruptions by cutting their complexity, keeping the economy trapped in low-value production – and poverty. But buffers to such disruptions – for instance, large inventories of raw materials – could allow the economy to evolve past this point.

    The model led the team to evidence, buried in economic data, that shoring up supply chains with inventories was exactly what successful developing countries did until they became prosperous. The study suggests it is difficult to rapidly increase the complexity of an economy – although not impossible, given that China has successfully done so.

    New Scientist / Nature Human Behaviour    September 04, 2017