Handbook of Research on Complexity

Handbook of Research on Complexity

Elgar original reference

Edited by J. Barkley Rosser Jr.

Complexity research draws on complexity in various disciplines. This Handbook provides a comprehensive and current overview of applications of complexity theory in economics. The 15 chapters, written by leading figures in the field, cover such broad topic areas as conceptual issues, microeconomic market dynamics, aggregation and macroeconomics issues, econophysics and financial markets, international economic dynamics, evolutionary and ecological–environmental economics, and broader historical perspectives on economic complexity.

Chapter 12: Complex Systems Modeling and International Development

Hans-Peter Brunner and Peter Allen

Subjects: economics and finance, evolutionary economics


Hans-Peter Brunner and Peter Allen* 12.1 Society and its economy as a complex system As Matutinovic (2005, p. 873) states: An economy is a complex system consisting of a myriad of agents that may be placed in three broad categories: firms, households, and government. Agents’ interactions come under the broad umbrella of cooperation and competition while their production and consumption activities constitute the functional fabric of the economic system. Economic activities often span several hierarchical levels of functional interdependence. Complex systems are highly networked systems. They achieve their stability with the existing interdependencies of economic agents. Large-scale disruptions through intervening external agencies can destroy the web of interdependencies that exist in the socioeconomic system already, and introduce a simple dependency on the intervention and the funds associated with it, that can do more harm than good. This also means that the existing interactions are an evolved expression of the working of the system, and therefore external change agents will encounter resistance from the system to introduce change unless the intervention is designed sufficiently broadly and in a way that it is compatible with the existing system (Bar-Yam, 2004). Hence, international development is about the stimulation of a society’s and economy’s innate autocatalytic/self-organizing processes through interventions at the meso level of hierarchy (mostly the intermediary institutional level, and not at the individual agent or at the macro level). The interventions have to engage with the agents within the system, be sizeable enough to be deemed worthy of a response, but not...

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