A statistical mechanical view of complex economies under the green transition

Abstract We propose a stylized model of a complex economy to explore the economic tradeoffs imposed by the so called ‘green transition’—the shift towards more sustainable production paradigms—using tools from the Statistical Mechanics of disordered systems. Namely, we promote the parameters of a standard input-output economic model to random variables, in order to characterize the typical statistical properties of its equilibria. A central feature of our work is the explicit inclusion of a waste variable as a proxy for the unwanted byproducts, such as emissions, generated by different production processes. We find that the interplay between economic development and waste gives rise to a double phase transition, separating a region of viable economic activity from two distinct shutdown regimes. Notably, more wasteful (‘brown’) economies support a larger number of technologies per good but fail to activate most of them, limiting their productive capacity. In contrast, ‘greener’ economies, while having access to fewer technologies, tend to achieve higher economic welfare, up to a critical point where rapid growth under tight waste constraints may destabilize them. Our results highlight the structural tensions between technological development and environmental sustainability, suggesting that the green transition may require careful navigation to avoid abrupt collapses in economic activity. The nature of the phase transitions we observe in the model is linked to the shrinkage of feasible economic configurations under increasing constraints, akin to algorithmic phase transitions studied in Computer Science.