Dynamic efficiency and economic complexity

Abstract

This article deals with the link between complexity economics and the Austrian concept of dynamic efficiency. The conventional notion of efficiency used in economic science, regarded as static in this article, is rejected for being incompatible with complexity economics in epistemic terms. The concept of dynamic efficiency is thus presented as an alternative definition of efficiency, given its epistemic and theoretical similarities with complexity economics; more concretely, with Santa Fe complexity. Consequently, a direct, causal relationship between economic complexity and dynamic efficiency is highlighted. This relationship is confirmed in light of recent applications of both dynamic efficiency theory and complexity economics to the study of economic development. Finally, it is pointed out that economic complexity and dynamic efficiency can be combined to improve our understanding of the development process.

The Austrian School and Mathematics: Reconsidering Methods in Light of Complexity Economics

“…There is a vast literature on the similarities between Austrian and complexity economics (Barbieri 2013;Koppl 2009;Barkley Rosser 2015;Moreno-Casas 2021;Moreno-Casas and Bagus 2022). Both currents are presented as an alternative to the Walrasian equilibrium paradigm in economics, and both portray the economy as an emergent process integrated by heterogeneous agents with bounded rationality interacting in a decentralized way (Arthur, Durlauf, and Lane 1997;Barkley Rosser 2015).…”