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Evolutionary Micro-dynamics and Changes in the Economic Structure

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  • André Lorentz
  • Maria Savona

Abstract

The paper aims to account for the empirical stylised facts related to changes in sectoral structures that have led to the growth of services in most advanced countries over recent decades. A growth model with evolutionary micro-founded structural change is developed, which formalises the role of technical change and changes in intermediate demand as they affect the evolution of the sectoral composition of the economy and macro-economic growth. Firstly, we provide a micro-foundation for the Kaldorian Cumulative Causation mechanism. Secondly, we account for (demand-related) macro-constraints affecting the micro-behaviour of firms in the decision to adopt technology. We also formalise the mechanisms transmitting the effects of micro-behaviour on aggregate growth, via changes in the intermediate linkages and sectoral composition of the economy. The simulated results are based on the use of the actual data, including Input-Output (I-O) coefficients in the case of Germany. Three scenarios are identified, which account for the effects of a set of key parameters on changes in the structure of the economy.

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Bibliographic Info

Paper provided by Max Planck Institute of Economics, Evolutionary Economics Group in its series Papers on Economics and Evolution with number 2007-17.

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Date of creation: Dec 2007
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Handle: RePEc:esi:evopap:2007-17

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Keywords: Economic Growth; Structural change; Growth of Services; Evolutionary Micro-foundation; Input-Output Length 36 pages;

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References

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  1. Michael Peneder & Serguei Kaniovski & Bernhard Dachs, . "What Follows Tertiarisation? Structural Change and the Role of Knowledge-based Services," WIFO Working Papers 146, WIFO.
  2. Maria Savona & André Lorentz, 2006. "Demand and Technology Determinants of Structural Change and Tertiarisation: An Input-Output Structural Decomposition Analysis for four OECD Countries," Working Papers of BETA 2006-01, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  3. Verspagen,Bart, 2000. "Growth and Structural Change: Trends, Patterns and Policy Options," Research Memorandum 015, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
  4. Schettkat, Ronald & Yocarini, Lara, 2006. "The shift to services employment: A review of the literature," Structural Change and Economic Dynamics, Elsevier, vol. 17(2), pages 127-147, June.
  5. Verspagen, B., 2002. "Structural Change and Technology. A Long View," Working Papers 02.13, Eindhoven Center for Innovation Studies.
  6. Kox, Henk L.M. & Rubalcaba, Luis, 2007. "Analysing the contribution of business services to European economic growth," MPRA Paper 2003, University Library of Munich, Germany.
  7. Parrinello, Sergio, 2004. "The service economy revisited," Structural Change and Economic Dynamics, Elsevier, vol. 15(4), pages 381-400, December.
  8. Giulio Cainelli & Rinaldo Evangelista & Maria Savona, 2006. "Innovation and economic performance in services: a firm-level analysis," Cambridge Journal of Economics, Oxford University Press, vol. 30(3), pages 435-458, May.
  9. G. Silverberg & B. Verspagen, 1995. "Evolutionary Theorizing on Economic Growth," Working Papers wp95078, International Institute for Applied Systems Analysis.
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Cited by:
  1. Tommaso Ciarli & André Lorentz & Maria Savona & Marco Valente, 2010. "The Effect Of Consumption And Production Structure On Growth And Distribution. A Micro To Macro Model," Metroeconomica, Wiley Blackwell, vol. 61(1), pages 180-218, 02.
  2. Benoît Desmarchelier & Faïz Gallouj, 2013. "Endogenous growth and environmental policy: are the processes of growth and tertiarization in developed economies reversible?," Journal of Evolutionary Economics, Springer, vol. 23(4), pages 831-860, September.

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