Processes analogous to ecological interactions and dispersal shape the dynamics of economic activities

TL;DR

This study demonstrates that economic activity dynamics across countries can be effectively modeled using eco-evolutionary processes, highlighting the importance of interactions and dispersal in economic change.

Contribution

It introduces a novel quantitative framework inspired by ecological processes to analyze global economic dynamics, supported by empirical data from 77 countries over 59 years.

Findings

Strong support for models with positive interactions between economic activities

Evidence of spatial dispersal influencing economic activity dynamics

Variability in model support across countries due to institutional and historical factors

Abstract

The processes of ecological interactions, dispersal and mutations shape the dynamics of biological communities, and analogous eco-evolutionary processes acting upon economic entities have been proposed to explain economic change. This hypothesis is compelling because it explains economic change through endogenous mechanisms, but it has not been quantitatively tested at the global economy level. Here, we use an inverse modelling technique and 59 years of economic data covering 77 countries to test whether the collective dynamics of national economic activities can be characterised by eco-evolutionary processes. We estimate the statistical support of dynamic community models in which the dynamics of economic activities are coupled with positive and negative interactions between the activities, the spatial dispersal of the activities, and their transformations into other economic activities. We find strong support for the models capturing positive interactions between economic activities and spatial dispersal of the activities across countries. These results suggest that processes akin to those occurring in ecosystems play a significant role in the dynamics of economic systems. The strength-of-evidence obtained for each model varies across countries and may be caused by differences in the distance between countries, specific institutional contexts, and historical contingencies. Overall, our study provides a new quantitative, biologically inspired framework to study the forces shaping economic change.