Transformation Networks: How Innovation and the Availability of Technology can Increase Economic Performance

Abstract A transformation network describes how one set of resources can be transformed into another via technological processes. Transformation networks in economics are useful because they can highlight areas for future innovations, both in terms of new products, new production techniques, or better efficiency. They also make it easy to detect areas where an economy might be fragile. In this paper, we use computational simulations to investigate how the density of a transformation network affects the economic performance, as measured by the gross domestic product (GDP), of an artificial economy. Our results show that on average, the GDP of our economy increases as the density of the transformation network increases. We also find that while the average performance increases, the maximum possible performance decreases and the minimum possible performance increases.