Modelling the Economy as an Evolving Space of Flows

The spatial economy has increasingly come to be viewed, in the felicitous phrase of Manuel Castells (2000), as a space of flows. The mental picture we have of this economy is a motion picture, not a still shot. Moving along the links of various networks are ever greater quantities of people, goods, material, money, and information. Settlements, in turn, appear as increasingly interdependent nodes through which these vast quantities pass. The acceleration of flows through space can be accounted for largely by technological advances in communication and transportation and the emergence of far-flung value chains, which are driven by economizing behaviour, and abetted by increasingly liberal trade agreements and industrial deregulation (Wolf 2004). Many authors have commented on how the spatial economy would seem to manifest characteristics of complex systems – and there are indeed similarities. Steven Durlauf, who has written extensively on economic complexity (both theoretical and empirical), defines complex systems as “those [systems composed] of a set of heterogeneous agents whose behaviour is interdependent and may be described as a stochastic process” (Durlauf 2005, p. 226). Durlauf sees the following four properties as distinguishing complex systems from other systems characterized by stochastic processes and interdependencies.