The Theory of Economic Cognitive Infrastructure: A New Production Factor for Understanding Productivity, Inequality, and Development

Standard economic theory assumes that agents endowed with information and resources optimize decisions to maximize utility. Behavioral economics has documented systematic deviations from rationality, yet both paradigms share an unexamined assumption: that decision-processing capacity is an inherent individual property. This paper challenges that assumption by proposing that such capacity is not individual but infrastructural. We introduce Economic Cognitive Infrastructure (ECI): the set of external systems that capture, process, prescribe, and assist execution of economic decisions. We argue that ECI constitutes a previously unrecognized production factor whose unequal distribution explains substantial portions of observed productivity gaps between firms, regions, and countries, as well as persistent development failures and the knowledge–action gap. The paper makes four contributions: (1) it introduces ECI as a new ontological object distinct from physical, human, and social capital; (2) it proposes a generalizable causal mechanism linking cognitive infrastructure to execution capacity; (3) it derives counterintuitive, falsifiable predictions that challenge standard economic assumptions; and (4) it presents preliminary empirical evidence from 357 Mexican small and medium-sized enterprises showing average profit increases of 67% following ECI interventions, with interaction effects validating core theoretical predictions. We explicitly situate the Theory of Economic Cognitive Infrastructure within the Extended Mind thesis, bounded rationality, and distributed cognition literature, providing a philosophical foundation for treating economic decision-making as an extended cognitive process. The findings suggest that economic inequality may be, in significant part, inequality of cognitive infrastructure, and that effective development interventions must address ECI provision alongside traditional factors.