Networking, interdependence, circulation

Many economic activities and variables are interlinked. A well-known example of this is the economic cycle, which serves as a model for the networks between households, companies, the state and abroad. In many cases, the circumstances are much more complex and multi-layered, which can be expressed by means of forms of representation such as impact diagrams or system dynamics models.

Networking also implies interdependence, which means reciprocal dependencies. If an element changes, this has an effect on one or more other networked variables. For example, the impact diagram above shows that debt and GDP are indirectly linked.

Note: The ability to think systemically improves the understanding of interconnectedness, interdependence and dynamic processes.