Economic context Publications

Interdependence of Growth, Structure, Size and Resource Consumption During an Economic Growth Cycle

Interdependence of Growth, Structure, Size and Resource Consumption During an Economic Growth Cycle

Scientists and economists often seek to understand the linkages among natural resources consumption and the cost of resources in tandem with the growth rate, size, and structure of complex systems. These systems can be biological organisms, ecosystems, and national or global economies. 

The size of economies is measured by many metrics such as gross domestic product (or net output), gross output, population, the quantity of physical capital (in money and physical units), and others. The structure of an economy can be measured by functions and metrics that summarize the distribution of stocks and flows among people and jobs, companies, economic sectors [1,2,3], or other categories through which money and natural resources flow. 

The purpose of this paper is to discuss the dynamic interdependencies among growth, size, and structure of an economy using outputs from an updated version of the Human and Resources with MONEY (HARMONEY) model of King (2020). The model simultaneously tracks physical and monetary stocks and flows, by including physical resources and constraints along with macroeconomic accounting and debt, HARMONEY speaks the language of both economists and physical and natural scientists. 

All models are simplified representations of real-world processes, yet stylized models are still useful for providing insight into real-world data. A model that can accurately represent the dynamic interdependence between growth, size, and structure has more explanatory power than those that cannot. While HARMONEY v1.1 is not calibrated to a real-world economy, it has critical features and structural assumptions that make it applicable and valuable for comparing its trends to long-term trends in real-world data. 

Read the full paper by Carey here

[1] Hidalgo CA, Klinger B, Barabasi A-L, Hausmann R (2007) The product space conditions the development of nations. Science 317(5837):482–487 

[2] Hidalgo CA, Hausmann R (2009) The building blocks of economic complexity. Proc Natl Acad Sci 106(26):10570–10575 

[3] King CW (2016) Information theory to assess relations between energy and structure of the U.S. economy over time. Biophys Econ Resour Quality 1(2):10 

Photo credit: Ryan Duffy