INTERVIEW - Knowledge, not resources, decides a nation’s future: Author of The Infinite Alphabet

​​​​​​​By Aysu Bicer

LONDON (AA) - For years, Cesar Hidalgo has been one of the world’s most influential voices on economic complexity – the study of how knowledge shapes production, innovation and national prosperity.

In his new book, The Infinite Alphabet: And the Laws of Knowledge, Hidalgo argues that knowledge is the "secret to the wealth of nations," but only if we understand it not as a single thing, but as "an ever-growing tapestry of unique ideas, experiences and received wisdom."

Knowledge, he insists, behaves according to principles as real as Newton’s laws. "We tend to think of knowledge as the information scientists produce," he told Anadolu. "But knowledge is also much more pedestrian,” the tacit expertise of bakers, mechanics and technicians. Much of it "is not something that can be written down." Instead, it is embodied in people, teams, organizations and entire industries.

The embodied nature makes knowledge extraordinarily fragile.

Hidalgo cites the collapse of Polaroid as a cautionary tale: even when its last remaining film factory was bought and staffed with the best available workers, the new owners could not reproduce the iconic instant film.

The know-how had evaporated from the organizational fabric. "You may imagine that instant photography was something that was completely figured out," he said. "It wasn’t."

- Knowledge spreads through migration

Hidalgo tries to organize decades of empirical research in his book into what he calls the three laws of knowledge.

The first law concerns how knowledge grows and decays. He points to quantifiable patterns ranging from Thurstone’s 1916 learning curves to Moore’s law.

"We know a lot about how knowledge grows, how it diffuses, how to estimate its value," he said. The patterns include not just improvement but forgetting.

The second law describes how knowledge moves across space and activities. It rarely jumps randomly. It spreads through migration, shared practices and similarity between industries.

The classic example, Hidalgo notes, is the Vespa: post-war engineers who once built aircraft moved into scooters by repurposing similar metalworking capabilities. "Knowledge flows from activities to activities that are similar," he said.

Migration, he argues, is essential, though its effects are slow. "Knowledge is embodied. It usually doesn’t travel in the form of ideas."

Research shows that when German chemists fleeing World War II arrived in the US, it was their students, not their peers, who absorbed most of their expertise. "It impacts the next generation of knowledge workers," he said.

The third law is perhaps the most counterintuitive: knowledge is non-fungible. "You cannot say one plus one knowledge equals two knowledges,” he said.

You can add phones or barrels of oil, but knowledge is more like "one apple plus one orange" – a portfolio of distinct capabilities. Hidalgo has spent years developing mathematical tools to estimate portfolios using export and industrial data. The models, he argued, explain why some cities and countries grow faster than others.

- When policymakers get knowledge wrong

Hidalgo’s frustration with development policy is one reason he wrote The Infinite Alphabet.

Growing up in Chile, he watched resource-rich countries misdiagnose what they lack. He bristles at the notion that because Chile has lithium, it should manufacture batteries. "People think lithium mining and battery design are related," he said. "But having a salt lake with flamingos is very far from having the IP capabilities of Shenzhen."

He said what matters is the ability to design, iterate and coordinate across complex organizations – not the atoms under one’s feet. "Knowledge is heavier than atoms."

The misunderstandings are costly. "A lot of economic development is based on bad hunches," he said.

Instead of pouring money rapidly into prestige projects, he suggested creating knowledge endowments that fund researchers sustainably.

Using Ecuador’s failed high-tech city, Yachay, as an example, he imagined placing $1 billion in an investment fund rather than spending it outright. At a conservative 4% annual payout, the nation would receive $40 million every year, enough to fund 40 world-class researchers at $1 million per year each. "A million a year in research funding goes a long way," he said.

- Conflicts, rise of AI

War, unsurprisingly, disrupts the delicate processes. Ukraine, Hidalgo notes, was an economy with surprisingly high complexity for its income before Russia’s war. "We would have expected it to grow," he said. But in wartime, "economic complexity is not at the driver’s seat," he said.

Still, he cautions against treating conflict as an economic outcome.

Hidalgo said many wars arise from geopolitical ambition, not structural weakness.

International organizations can do little to stop them, he argued, because by design they lack the authority or muscle to counter major powers. "These institutions are relatively weak compared to the member states themselves," he said. Countries insist on sovereignty, so the UN has peacekeepers, not armies, he added.

Hidalgo also reflected on the role of artificial intelligence. His latest book is "AI free," but he frequently uses large models as harsh editors.

"I ask the AIs to be really mean about my text — tell me why this is b-------," he said. He then rewrites with the criticism in mind. It reduces the cost of iteration, much as a colleague or editor would.

What worries him is whether young people who grow up with AI will develop the same critical muscles. But he resists easy pessimism.

Judging a 21-year-old, he said, is tricky: "If you had met me at 21 in 2001, you might have thought my generation was doomed."​​​​​​​