Making the world flat

The economies of poor and developing countries often depend almost exclusively on a single product—perhaps timber or coffee—or on a handful of products at most. That’s hardly a startling observation, but what’s puzzled economists over the years is why it’s been so difficult for these countries to start up new activities in the hope of spurring economic growth and lifting themselves out of poverty.

While there have been a few success stories, such efforts have often ended up consuming heaps of money to little lasting effect.

A team of economists and physicists [led by network theory expert Albert-László Barabási and by former Venezuelan Minister of the Economy Ricardo Hausman] is now proposing a new way to look at development. The researchers have shown that a country’s competitive edge can spread from one kind of product to another along a well-defined network of links, much as disease epidemics tend to spread among people who are socially connected.

The newly charted map of products could help countries design good policies by indicating the most promising paths to creating new industries. The network’s structure also presages the hurdles that many developing countries will face along that path.

Read the rest of my cover story in the Sept. 1 Science News.

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