Complex Systems

Ecological Theory Explains Why Diverse Island Economies Are More Stable Download PDF

Kristen A. Vitro1
Miranda E. Welsh2
Todd K. BenDor1,*
Aaron Moody3
1 Department of City and Regional Planning
University of North Carolina at Chapel Hill
Chapel Hill, NC 27599
*Corresponding Author: bendor@unc.edu

2 Thompson Writing Program
College of Arts and Sciences
Duke University
Durham, NC 27708

3 Department of Geography
University of North Carolina at Chapel Hill
Chapel Hill, NC 27599

Abstract

Significant work in ecology and economics has derived sophisticated frameworks for understanding system stability over time. Despite the potential of ecological methods to identify the processes underlying variation in stability, these methods have yet to be rigorously applied to economic systems. In this paper, a framework is presented for describing economic system stability as analogous to biological communities. As a proof of concept, this framework is applied to island export economies and demonstrates that economic stability increases with sectoral diversity. Furthermore, this relationship was driven not by the portfolio effect, as is commonly assumed, but by the mechanism of overyielding, whereby individual abundance (analogous to sector size or value) increases with diversity. The results suggest several means of managing export economies for stability. On a broader level, the results illustrate the importance of continued collaboration between the fields of economic development and ecology in facilitating our understanding of complex systems.