Why poor countries stay poor, and how they can get rich (New Scientist)
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.