A neo-Schumpeterian Approach to Why Growth Rates Differ
The paper applies the neo-Schumpeterian long wave theory to the international dimension, with the purpose of studying growth rates differences across countries. It presents an aggregate growth model based on the competition between two technological paradigms, old and new, whose productivity trends follow a logistic path. The analytical properties of the model are studied through the use of simulation techniques, and they are then empirically investigated for the case of 21 oecd economies in the period 1890-1990. The econometric results indicate that the process of catching up, forging ahead and falling behind is the complex outcome of the adaptation of each country to the emerging technological paradigm. Countries differ in their timing of entry into the new long wave (dependent on their technological congruence), and in the speed at which the new paradigm diffuses and becomes dominant (dependent on their social capability, and on their facility for structural change). The earlier the entry and the faster the diffusion, the better will be the economic performance of the country relative to the others over the long wave growth process.
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