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Evolutionary Micro-dynamics and Changes in the Economic Structure

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Author Info
André Lorentz
Maria Savona

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

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Find related papers by JEL classification:
E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Institutional; Evolutionary
L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Verspagen,Bart, 2000. "Growth and Structural Change: Trends, Patterns and Policy Options," Research Memoranda 015, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
    Other versions:
  2. 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. [Downloadable!]
  3. Gallouj, Faiz & Weinstein, Olivier, 1997. "Innovation in services," Research Policy, Elsevier, vol. 26(4-5), pages 537-556, December. [Downloadable!] (restricted)
  4. Verspagen, B., 2002. "Structural Change and Technology. A Long View," ECIS Working Papers 02.13, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology. [Downloadable!]
  5. 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. [Downloadable!] (restricted)
  6. 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. [Downloadable!] (restricted)
  7. Maria Savona & André Lorentz, 2005. "Demand and Technology Determinants of Structural Change and Tertiarisation: An Input-Output Structural Decomposition Analysis for four OECD Countries," LEM Papers Series 2005/25, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
    Other versions:
  8. Michael Peneder & Serguei Kaniovski & Bernhard Dachs, . "What Follows Tertiarisation? Structural Change and the Role of Knowledge-based Services," WIFO Working Papers 146, WIFO. [Downloadable!]
  9. Parrinello, Sergio, 2004. "The service economy revisited," Structural Change and Economic Dynamics, Elsevier, vol. 15(4), pages 381-400, December. [Downloadable!] (restricted)
  10. G. Silverberg & B. Verspagen, 1995. "Evolutionary Theorizing on Economic Growth," Working Papers wp95078, International Institute for Applied Systems Analysis. [Downloadable!]
  11. Bart Verspagen, . "Evolutionary macroeconomics: A synthesis between neo-Schumpeterian and post-Keynesian lines of thought," The Electronic Journal of Evolutionary Modeling and Economic Dynamics, IFReDE - Université Montesquieu Bordeaux IV. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Tommaso Ciarli & André Lorentz & Maria Savona & Marco Valente, 2008. "The Effect of Consumption and Production Structure on Growth and Distribution. A Micro to Macro Model," Papers on Economics and Evolution 2008-13, Max Planck Institute of Economics, Evolutionary Economics Group. [Downloadable!]
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