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Creative Destruction and the Measurement of Productivity Change

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Author Info

  • John Stanley Metcalfe
  • Ronnie Ramlogan

Abstract

Recent advances in the measurement of productivity change have exposed a much clearer picture of the turbulent dynamics of restless capitalism. This essay has two objectives. First, to show that the population method drawn from evolutionary theory provides a coherent frame in which the various processes impinging on productivity change can be integrated. Secondly, to identify some of the puzzles and ambiguities that arise from decomposing any aggregate measure of productivity growth into innovation effects in firms and selection effects in markets. We shall also show that there is no unique way of making this decomposition. This is an important matter because the transmission process between innovation and changing resource allocation underpins the process of economic development in the broad sense. JEL Classification: D24, E11, O30, O40.

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Bibliographic Info

Article provided by Presses de Sciences-Po in its journal Revue de l'OFCE.

Volume (Year): 97 bis (2006)
Issue (Month): 5 ()
Pages: 373-397

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Handle: RePEc:cai:reofsp:reof_073_0373

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Web page: http://www.cairn.info/revue-de-l-ofce.htm

Related research

Keywords: productivity change and evolutionary population dynamics; fisher price theorems;

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References

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  1. Krüger, Jens & Cantner, Uwe, 2004. "Technological and Economic Mobility in Large German Manufacturing Firms," Publications of Darmstadt Technical University, Institute of Economics (VWL) 34393, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).
  2. Bartelsman, Eric & Haltiwanger, John & Scarpetta1, Stefano, 2004. "Microeconomic evidence of creative destruction in industrial and developing countries," Policy Research Working Paper Series 3464, The World Bank.
  3. Carlin, W.J. & Haskel, J. & Seabright, P., 2001. "Understanding 'The Essential Fact about Capitalism': markets, competition and creative destruction," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
  4. J.S Metcalfe, 2004. "Accounting for Evolution: An Assessment of the Population Method," Papers on Economics and Evolution 2004-21, Max Planck Institute of Economics, Evolutionary Economics Group.
  5. Lucia Foster & John Haltiwanger & C.J. Krizan, 1998. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Working Papers 6803, National Bureau of Economic Research, Inc.
  6. Nelson, Richard R., 1989. "Industry growth accounts and production functions when techniques are idiosyncratic," Journal of Economic Behavior & Organization, Elsevier, vol. 11(3), pages 323-341, May.
  7. Uwe Cantner & Jens Krüger, 2008. "Micro-heterogeneity and aggregate productivity development in the German manufacturing sector," Journal of Evolutionary Economics, Springer, vol. 18(2), pages 119-133, April.
  8. Richard Disney & Jonathan Haskel & Ylva Heden, 2003. "Restructuring and productivity growth in uk manufacturing," Economic Journal, Royal Economic Society, vol. 113(489), pages 666-694, 07.
  9. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
  10. Baldwin, John R. Gu, Wulong, 2006. "Competition, Firm Turnover and Productivity Growth," Economic Analysis (EA) Research Paper Series 2006042e, Statistics Canada, Analytical Studies Branch.
  11. Harberger, Arnold C, 1998. "A Vision of the Growth Process," American Economic Review, American Economic Association, vol. 88(1), pages 1-32, March.
  12. Thorbj�rn Knudsen, 2004. "General selection theory and economic evolution: The Price equation and the replicator/interactor distinction," Journal of Economic Methodology, Taylor and Francis Journals, vol. 11(2), pages 147-173.
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Citations

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Cited by:
  1. J. Stan Metcalfe & John Foster, 2009. "Evolutionary Growth Theory," Discussion Papers Series 388, School of Economics, University of Queensland, Australia.
  2. John Metcalfe, 2008. "Accounting for economic evolution: Fitness and the population method," Journal of Bioeconomics, Springer, vol. 10(1), pages 23-49, April.

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