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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.

Suggested Citation

  • Pier-Paolo Saviotti & Andreas Pyka, 2004. "Economic Development, Variety and Employment," Revue économique, Presses de Sciences-Po, vol. 55(6), pages 1023-1049.
  • Handle: RePEc:cai:recosp:reco_556_1023
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    7. 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.
    8. 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.
    9. Fagerberg, Jan & Verspagen, Bart, 1998. "Productivity, R&D Spillovers and Trade," Working Papers 98.2, Eindhoven Center for Innovation Studies.
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    13. Lancaster, Kelvin, 1975. "Socially Optimal Product Differentiation," American Economic Review, American Economic Association, vol. 65(4), pages 567-585, September.
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    Cited by:

    1. Cristiano Antonelli & Morris Teubal, 2010. "Venture Capitalism as a Mechanism for Knowledge Governance," Chapters,in: The Capitalization of Knowledge, chapter 3 Edward Elgar Publishing.
    2. Cristiano Antonelli & Morris Teubal, 2012. "From the Corporation to Venture Capitalism: New Surrogate Markets for Knowledge and Innovation Led Economic Growth," Chapters,in: Handbook on the Economics and Theory of the Firm, chapter 38 Edward Elgar Publishing.
    3. Kurt Dopfer, 2013. "Evolutionary Economics," Papers on Economics and Evolution 2013-08, Philipps University Marburg, Department of Geography.
    4. 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;Western Regional Science Association, vol. 43(4), pages 859-877, December.
    5. Saviotti, Pier Paolo & Pyka, Andreas, 2013. "From necessities to imaginary worlds: Structural change, product quality and economic development," Technological Forecasting and Social Change, Elsevier, vol. 80(8), pages 1499-1512.
    6. Ugur, Mehmet & Mitra, Arup, 2014. "Effects of innovation on employment in low-income countries: A mixed-method systematic review," MPRA Paper 58214, University Library of Munich, Germany, revised 27 Aug 2014.
    7. 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.
    8. Fritsch, Michael, 2013. "New Business Formation and Regional Development: A Survey and Assessment of the Evidence," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 9(3), pages 249-364, February.
    9. Freire Junior, Clovis, 2017. "Promoting structural transformation: Strategic diversification vs laissez-faire approach," MERIT Working Papers 037, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    10. Clovis Freire, 2017. "Promoting structural transformation: strategic diversification vs. laissez-faire approach," Working Papers 151, United Nations, Department of Economics and Social Affairs.
    11. 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.
    12. 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.
    13. Cimoli, Mario & Fleitas, Sebastian & Porcile, Gabriel, 2011. "Real Exchange Rate and the Structure of Exports," MPRA Paper 37846, University Library of Munich, Germany.
    14. Attila Varga, 2017. "Place-based, Spatially Blind, or Both? Challenges in Estimating the Impacts of Modern Development Policies," International Regional Science Review, , vol. 40(1), pages 12-37, January.
    15. 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.
    16. repec:kap:jtecht:v:43:y:2018:i:3:d:10.1007_s10961-017-9628-2 is not listed on IDEAS
    17. repec:elg:eechap:14395_15 is not listed on IDEAS
    18. 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, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Dec 2004.

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