ECONOMIC COMPLEXITY AS NETWORK COMPLICATION - MULTIREGIONAL INPUT-OUTPUT STRUCTURAL PATH-ANALYSIS

This paper presents a description of some fundamental properties of ne tworks of economic selfinfluence and transfer of economic influence wi thin hierarchies of economic sub-systems using structural path analysi s within a multiregional input-output system. In this fashion, exchang e between sectors, activities and regions is viewed as a network that can be decomposed hierarchically; economic complexity is viewed as an emerging property of the process of network complication that accompan ies the augmentation of inputs and the growing synergetic interactions between regional sub-systems. For the reasons of clarity, the cases o f two and three regions are considered in detail. The treatment of the general case of n regions and the graph-theoretical description of th e global augmentation process of the network complication is presented in two appendices, where the mathematical proofs can be found. It is expected that this analysis will provide a methodology that will be us eful in understanding regional economic sustainability (i.e., spatial and temporal invariability), structural stability and structural chang es in economic networks as well as providing insights into the role of internal and external trade between regions. To support this expectat ion,the detailed theoretical analysis of the block structural paths in the social. accounting system is presented supplemented by economic a nalysis of the Indonesian social accounting matrices for 1975, 1980 an d 1985.