Solow Production Networks in Economic Growth

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.