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Seoul Journal of Economics
[ Article ]
Seoul Journal of Economics - Vol. 38, No. 3, pp.283-325
ISSN: 1225-0279 (Print)
Print publication date 30 Aug 2025
Received 17 Jul 2024 Revised 16 Aug 2025 Accepted 19 Aug 2025
DOI: https://doi.org/10.22904/sje.2025.38.3.002

Solow Production Networks in Economic Growth

Juan M.C. Larrosa ; Lorena Tedesco
Juan M.C. Larrosa, Universidad Nacional del Sur, Argentina jlarrosa@uns.edu.ar
Lorena Tedesco, Universidad Nacional del Sur, Argentina

JEL Classification: O41, L14

Abstract

We propose a novel extension of the classical Solow growth model by embedding a production network structure among sectors. Unlike the traditional model, which treats productivity as a unique aggregate factor, this framework allows productivity to emerge from the structure of inter-sectoral linkages. Each sector produces using its own capital and inputs sourced from other sectors, introducing varying degrees of self-dependence and interdependence. The model captures how technological improvements or shocks in one sector propagate through the economy via input–output relationships, shaping aggregate productivity growth. Analytical derivations across diverse network topologies, which range from linear to complete networks, demonstrate that the structure of the production network plays a crucial role in determining long-run growth outcomes. Results show that network centrality, connection intensity, and self-dependence intensity significantly influence how shocks are diffused. Research highlights the non-linear, systemic effects of local productivity changes and suggests that growth is structurally embedded in the organization of production.

Keywords:

network production, economic growth, technological progress, Solow model

Acknowledgments

Funding was received from Proyecto Grupo de Investigación 24/E177, Secretaría General de Ciencia y Tecnología, Universidad Nacional del Sur.

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