In Why Information Grows I show that thinking of economies as computers provides fertile improvements to our theoretical understanding of economies and to the tools we use to anticipate the evolution of economic systems. On the one hand, I show that the evolution of economies is a natural extension of the evolution of the computation that already exists in the universe in a variety of systems: from simple biological cells to the human brain. For computation to transcend its humble physical and biological origins smaller computers need to come together: cells need to form multicellular organisms and people need to form teams, firms, and network of firms. This division of knowledge and knowhow—or division of computation—means that the economy is a computer embodied in social networks, and hence, that the computational capacities of economies are constrained by the institutions and technologies that limit our ability to form such networks. Using international trade data I empirically validate the computational economy hypothesis and show that by focusing on the ability of economies to compute we can predict the mix of products that an economy will make in the future, how fast economies will grow, and how unequal economies are.

See also Cesar Hidalgos' Royal Canadian Institute Lecture.

César A. Hidalgo leads the Macro Connections group at The MIT Media Lab and is also an Associate Professor of Media Arts and Sciences at MIT. Hidalgo's work focuses on improving the understanding of systems by using and developing concepts of complexity, evolution, and network science; his goal is to help improve understanding of the evolution of prosperity in order to help develop industrial policies that can help countries raise the living standards of their citizens. His areas of application include economic development, systems biology, and social systems. Hidalgo is also a graphic-art enthusiast and has published and exhibited artwork that uses data collected originally for scientific purposes. A native of Santiago de Chile, Hidalgo holds a PhD in physics from the University of Notre Dame and a bachelor's degree in physics from the Pontificia Universidad Catolica de Chile.