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Policy Implications of Economic Complexity and Complexity Economics

Elsner, Wolfram (2015): Policy Implications of Economic Complexity and Complexity Economics.

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Abstract

Complexity economics has developed into a promising cutting-edge research program for a more realistic economics in the last three or four decades. Also some convergent micro- and macro-foundations across heterodox schools have been attained with it. With some time lag, boosted by the financial crisis 2008ff., a surge to explore economic complexity’s (EC) policy implications emerged. It demonstrated flaws of “neoliberal” policy prescriptions mostly derived from the neoclassical mainstream and its relatively simple and teleological equilibrium models. However, most of the complexity-policy literature still remains rather general. Therefore, policy implications of EC are reinvestigated here. EC usually is specified by “Complex Adaptive (Economic) Systems” [CA(E)S], characterized by mechanisms, dynamic and statistical properties such as capacities of “self-organization” of their components (agents), structural “emergence”, and some statistical distributions in their topologies and movements. For agent-based systems, some underlying “intentionality” of agents, under bounded rationality, includes improving their benefits and reducing the perceived complexity of their decision situations, in an evolutionary process of a population. This includes emergent social institutions. Thus, EC has manifold affinities with long-standing issues of economic heterodoxies, such as uncertainty or path- dependent and idiosyncratic process. We envisage a subset of CA(E)S, with heterogeneous agents interacting, in the “evolution-of-cooperation” tradition. We exemplarily derive some more specific policy orientations, in a “framework” approach, embedded in a modern “meritorics”, that we call Interactive Policy.

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