The Co‐Evolution of Technology, Industrial Structure, and Supporting Institutions

Richard R. Nelson

in Technology, Organization, and Competitiveness

Published in print March 1998 | ISBN: 9780198290964
Published online November 2003 | e-ISBN: 9780191596162 | DOI:
 The Co‐Evolution of Technology, Industrial Structure, and Supporting Institutions

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There is a large intellectual discrepancy between most formal growth models described by economists and descriptions of growth in economic history. This paper draws on an evolutionary theory of economic growth that brings together appreciative theorizing regarding growth and formal theorizing. It aims to piece together a relatively coherent appreciative theoretical account of economic development at a sectoral level by laying out a story of the growth, and development, of a manufacturing sector, from birth to maturity, and perhaps until death, that seems to fit many cases and which can serve as a target for formalization. The paper first describes and tries to link two broad bodies of appreciative evolutionary theoretic writing: one proposes that a new technology develops along a relatively standard track from the time it is born, to its maturity, and that firm and industry structure ‘co‐evolve’ with the technology; the other is concerned with the development of institutions in response to changing economic conditions, incentives, and pressures. The matter of ‘punctuated equilibrium’ is then considered, before concluding with a consideration of two economic developmental implications that appear to flow from the analysis: the first concerns the pattern of change of productivity, of capital intensity, and relative variables associated with economic growth, as a technology and industry structure develop; the second is concerned with implicitly cross‐country comparisons, and is focused on how ‘comparative advantage’ develops in a new industry.

Keywords: co‐evolution; comparative advantage; economic development; economic growth; firm structure; growth models; industrial structure; institutional development; manufacturing sectors; new industries; punctuated equilibrium; sectoral growth; supporting institutions; technology; technology development

Chapter.  7717 words. 

Subjects: Microeconomics

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