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Economic Development, Variety and Employment

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  • Pier-Paolo Saviotti
  • Andreas Pyka

Abstract

In this paper economic development occurs due to the creation of new sectors. Each sector is created by a major innovation, giving rise to a new market whose size is measured by the adjustment gap. The changes in the composition of the economic system occurring during economic development give rise to an increase in variety, measured by the changes in informational entropy of the economic system. The results of the paper show that the growing variety of the economic system can lead to a growing creation of employment even when the capacity to create employment within each sector declines as the sector matures. The paper confirms the important role that variety can play in sustaining economic development in the long run.

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Bibliographic Info

Article provided by Presses de Sciences-Po in its journal Revue économique.

Volume (Year): 55 (2004)
Issue (Month): 6 ()
Pages: 1023-1049

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Handle: RePEc:cai:recosp:reco_556_1023

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References

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  1. Frenken, Koen & Saviotti, Paolo P. & Trommetter, Michel, 1999. "Variety and niche creation in aircraft, helicopters, motorcycles and microcomputers," Research Policy, Elsevier, vol. 28(5), pages 469-488, June.
  2. Jan Fagerberg, 2000. "Technological Progress, Structural Change and Productivity Growth: A Comparative Study," Working Papers 5, Centre for Technology, Innovation and Culture, University of Oslo.
  3. Boyan Jovanovic & Glenn MacDonald, 1994. "The Life-Cycle of a Competitive Industry," NBER Working Papers 4441, National Bureau of Economic Research, Inc.
  4. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May.
  5. Fagerberg, Jan & Verspagen, Bart, 1998. "Productivity, R&D Spillovers and Trade," Eindhoven Center for Innovation Studies (ECIS) working paper series 98.2, Eindhoven Center for Innovation Studies (ECIS).
  6. Klepper, Steven, 1996. "Entry, Exit, Growth, and Innovation over the Product Life Cycle," American Economic Review, American Economic Association, vol. 86(3), pages 562-83, June.
  7. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
  8. Saviotti, P. P. & Metcalfe, J. S., 1984. "A theoretical approach to the construction of technological output indicators," Research Policy, Elsevier, vol. 13(3), pages 141-151, June.
  9. Pier Saviotti & Andreas Pyka, 2004. "Economic development by the creation of new sectors," Journal of Evolutionary Economics, Springer, vol. 14(1), pages 1-35, January.
  10. David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-37, May.
  11. Lancaster, Kelvin, 1975. "Socially Optimal Product Differentiation," American Economic Review, American Economic Association, vol. 65(4), pages 567-85, September.
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Citations

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Cited by:
  1. Michael Fritsch, 2011. "The effect of new business formation on regional development - Empirical evidence, interpretation, and avenues for further research," Jena Economic Research Papers 2011-006, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  2. Cristiano Antonelli & Morris Teubal, 2009. "Venture Capitalism, New Markets and Innovation-led Economic Growth," ICER Working Papers 03-2009, ICER - International Centre for Economic Research.
  3. Cimoli, Mario & Fleitas, Sebastian & Porcile, Gabriel, 2011. "Real Exchange Rate and the Structure of Exports," MPRA Paper 37846, University Library of Munich, Germany.
  4. Michael Fritsch, 2011. "New Business Formation and Regional Development: A Survey and Assessment of the Evidence," Discussion Papers of DIW Berlin 1127, DIW Berlin, German Institute for Economic Research.
  5. Frank Oort & Johan Oud & Otto Raspe, 2009. "The urban knowledge economy and employment growth: a spatial structural equation modeling approach," The Annals of Regional Science, Springer, vol. 43(4), pages 859-877, December.
  6. Michael Fritsch & Florian Noseleit, 2009. "Start-ups, Long- and Short-Term Survivors and their Effect on Regional Employment Growth," Jena Economic Research Papers 2009-081, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  7. Antonelli, Cristiano & Teubal, Morris, 2006. "Venture Capitalism as a Mechanism for Knowledge Governance," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 200604, University of Turin.
  8. Koen Frenken & Frank G. van Oort & Thijs Verburg & Ron A. Boschma, 2004. "Variety and regional economic growth in the Netherlands," Papers in Evolutionary Economic Geography (PEEG) 0502, Utrecht University, Section of Economic Geography, revised Dec 2004.
  9. Antonelli Cristiano & Teubal Morris, 2011. "From the corporation to venture capitalism: new surrogate markets for knowledge and innovation-led economic growth"," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201106, University of Turin.
  10. Michael Fritsch, 2012. "Methods of analyzing the relationship between new business formation and regional development," Jena Economic Research Papers 2012-064, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  11. Kurt Dopfer, 2013. "Evolutionary Economics," Papers on Economics and Evolution 2013-08, Max Planck Institute of Economics, Evolutionary Economics Group.

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