César A. Hidalgo and the Study of Knowledge as a Natural Law
In his latest book, The Infinite Alphabet, economist and data scientist César A. Hidalgo argues that knowledge behaves like a physical system governed by laws of time, space, and value. The book is not a theoretical treatise; it is a collection of case studies that illustrate how patterns of knowledge growth and diffusion mirror the dynamics of matter and energy. For scholars, policymakers, and business leaders in Hungary, Hidalgo’s framework offers a new lens to assess the country’s economic trajectory and to design interventions that harness the power of knowledge.
Hidalgo’s narrative begins in an airport lounge, where a lawyer named Charlie turns a drunken favor into a thriving court‑coverage business. The anecdote is a microcosm of how knowledge can be repurposed, recombined, and amplified. It sets the stage for a broader exploration of how skills, facts, and rules—what Hidalgo calls the “infinite alphabet”—interact to create economic value.
For those working in the Hungarian economy, the book’s central claim is clear: if we can identify the underlying principles that govern knowledge, we can predict where growth will occur and how to accelerate it.
Three Principles Governing Knowledge Growth
Principles of Time: Growth, Decay, and Leadership
Hidalgo identifies the first set of laws as the Principles of Time. These rules describe how knowledge accumulates, ages, and sometimes fades. In the electronics industry, for example, knowledge grows exponentially because each new invention builds on a dense network of prior discoveries. Conversely, industries that rely on a narrow set of skills may experience rapid decay when those skills become obsolete.
For Hungarian firms, this means that sectors such as software development, renewable energy, and biotechnology—where knowledge is highly cumulative—are likely to experience sustained growth. In contrast, traditional manufacturing may need to invest in upskilling to avoid stagnation.
Principles of Space: Diffusion Across Borders and Industries
The second set of laws, the Principles of Space, explain how knowledge moves across geographic and sectoral boundaries. Hidalgo shows that knowledge diffusion is not random; it follows network pathways that depend on existing collaborations, institutional ties, and cultural compatibility.
Hungary’s position in Central Europe offers a strategic advantage. By strengthening ties with neighboring countries—Poland, Slovakia, Austria—and with global hubs like Silicon Valley, Hungarian institutions can accelerate the flow of ideas. Initiatives such as the European Innovation Scoreboard and the EU’s Horizon Europe program provide mechanisms to facilitate this cross‑border diffusion.
Principles of Value: Creating Wealth Through Knowledge Combinations
The third set of laws focuses on the value created when different pieces of knowledge are combined. Hidalgo argues that not all combinations are equal; some produce high returns while others yield marginal gains. The key is to identify “knowledge clusters” that have high potential for synergy.
For example, pairing data science expertise with domain knowledge in healthcare can lead to breakthroughs in personalized medicine. Hungarian universities and research institutes can map these clusters to guide funding decisions and talent development.
Implications for Hungarian Economic Policy
Avoiding the Pitfalls of Knowledge Cities
Hidalgo warns against attempts to build knowledge from scratch without understanding the underlying laws. Projects like Ecuador’s Yachay or Saudi Arabia’s Neom have struggled because they ignored the natural diffusion pathways of knowledge. Hungary can learn from these examples by focusing on strengthening existing ecosystems rather than creating isolated “knowledge cities.”
Policy makers should prioritize investments that enhance connectivity—both digital and physical—between universities, research centers, and industry. This includes expanding high‑speed broadband, supporting joint research projects, and creating incentives for knowledge spillovers.
Leveraging Existing Knowledge Networks
Hungary already hosts a vibrant network of universities, research institutes, and private companies. By mapping these networks and identifying key nodes, policymakers can target interventions that amplify the flow of knowledge. For instance, the Corvinus University of Budapest’s Collective Learning Centre (CCL) serves as a hub for interdisciplinary research and can act as a catalyst for regional innovation.
Practical Steps for Businesses and Innovators
Mapping Knowledge Assets
Companies should conduct an internal audit of their knowledge assets—skills, patents, proprietary processes—and assess how they align with the Principles of Time and Value. Tools such as knowledge mapping software can visualize these assets and highlight gaps.
Building Collaborative Ecosystems
Collaboration is the engine of knowledge diffusion. Firms can partner with universities, research institutes, and other firms to co‑develop new technologies. Joint labs, incubators, and industry‑academia consortia create environments where ideas can cross-pollinate.
Investing in Human Capital
Human capital is the most flexible component of the infinite alphabet. Continuous learning programs, mentorship, and cross‑functional teams help employees acquire new skills and adapt to changing knowledge landscapes. Hungarian companies can leverage government subsidies for training to reduce costs.
How Corvinus University Supports Knowledge Innovation
Research Centers and Interdisciplinary Labs
Corvinus University hosts several research centers that focus on economic complexity, data science, and digital marketing. The Collective Learning Centre, for example, brings together economists, computer scientists, and sociologists to study how knowledge spreads in complex systems.
Students and researchers can access state‑of‑the‑art facilities, collaborate on international projects, and publish findings in high‑impact journals.
Educational Programs for Future Economists
The university offers bachelor’s, master’s, and PhD programs that integrate quantitative methods with real‑world case studies. Graduates are equipped to apply Hidalgo’s principles in consulting, policy analysis, and entrepreneurship.
Take Action: Apply the Laws of Knowledge Today
Understanding the laws that govern knowledge is only the first step. To translate theory into practice, stakeholders in Hungary should:
- Engage with Corvinus University’s research centers to stay abreast of the latest findings.
- Map their organization’s knowledge assets to identify growth opportunities.
- Participate in cross‑border collaborations to accelerate knowledge diffusion.
- Invest in continuous learning to keep pace with evolving knowledge clusters.
- Advocate for policies that strengthen connectivity and reduce barriers to knowledge flow.
By aligning strategies with the Principles of Time, Space, and Value, Hungarian businesses and policymakers can create a resilient economy that thrives on knowledge.
Explore Corvinus University’s research centers to deepen your understanding of economic complexity: Research at Corvinus.
Consider how your organization can map its knowledge assets to identify growth opportunities.
Join our upcoming webinar on knowledge diffusion in Hungary: Register now.
Contact our team to discuss collaboration on policy research: Get in touch.
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