Reading the very good paper by Hausmann and Hidalgo (their website), he points out that the diversity of capibility causes exponential increases in GDP. Not stylized, a direct result of Shannon, to wit:
2^(B/C) -1 = SNR in the limit. The more accurate a country is, the greater the product space (B) per fixed channel. In a discrete model, we approach the theoretical liit as the number of discrete channels increase. Second, as we drop transport costs, the channel bandwidth increases, which increase the product space available per given SNR.
Put the equation in its other form: B = C*log(1+SNR) and what do we see? C increases speeding up transport along with increasing transport efficiency. Second. increasing inventory accuracy (SNR) gets greater log(growth). In the discrete versions, this growth comes with a greater number of channel components.
Finally we see growth related to the prior number of channels, the so called fractal effect. When balanced growth ocurs, it occurs due to greater channel rank,and that is N*log(N) effect, where N is channel depth. Hence, the actual fact, greater product variability in an economy is an increase in channel components, resulting from transport efficiency and inventory accuracy.
Notice the paper derives the binomial model of the economy, specifying thenumber of ways that variable products can be arranged. Again, a direct result of the minimum redundancy norm. The economic network organizes itself such the the correct sequence of inputs arrive consistently from network level to network level. Mathematicians actually show this binomial result is constructed from a Fibonaccie series, I see this in the literature and I might even bother to locate the references is need be. Treu for both the negative order binomial (probability that some set of product do not show up) and the positive order binomial acan be constructed from a minimum redundancy set of F polynomials.
Finally, why are the product matrices triangular rather than diagonal? Becaues production maximizes the available entropy, and that is asymmetric. Go back and look at how Shrodinger and company dealt with asymmetry in their quantum matrices. Redundancy is minimal when we operate along the supply chain with fixed SNR, and that means we have to release energy (noise) to find the proper signal. The quantum effect.
What did I say about two years ago? The problem we face is solving the queuing problem in arbitrary networks.
It is information theory folks, and you dont't get this be a belief in the Great Exogenous. I suggest George Lakoff start looking for this in our heads rather than write puff pieces and calling it research.
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