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A New Taxonomy of Economic sectors With a View to Policy Implications




This paper is an attempt to tease out a taxonomy of economic sectors based on a systems approach to innovation and economic growth that may be useful for policy analysis. The taxonomy explored here revolves around novel products rather than ethereal knowledge-producing entities. This insight goes back to Allyn Young (1928) and Joseph Schumpeter (1934) who argued that the introduction of new goods was the engine of economic growth. More precisely, our taxonomy of sectors focuses on novel products which are efficiency-enhancing within and between sectors through the market mechanism. The scheme revolves around the relationship between 'Enabling' and 'Recipient' sectors (which gives the taxonomy its name: ER), and offers a lens for viewing and interpreting a substantive part of the mechanics of modern economic growth. The last part of the paper briefly discusses a few immediate policy implications, although it has the potential for greater use and value in this regard.

Suggested Citation

  • Eduardo Pol & Peter Carroll & Paul Robertson, 2001. "A New Taxonomy of Economic sectors With a View to Policy Implications," Economics Working Papers WP01-01, School of Economics, University of Wollongong, NSW, Australia.
  • Handle: RePEc:uow:depec1:wp01-01

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    References listed on IDEAS

    1. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    2. Jeffrey I. Bernstein & M. Ishaq Nadiri, 1989. "Research and Development and Intra-industry Spillovers: An Empirical Application of Dynamic Duality," Review of Economic Studies, Oxford University Press, vol. 56(2), pages 249-267.
    3. Stern, Nicholas, 1991. "The Determinants of Growth," Economic Journal, Royal Economic Society, vol. 101(404), pages 122-133, January.
    4. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
    5. Romer, Paul M, 1990. "Are Nonconvexities Important for Understanding Growth?," American Economic Review, American Economic Association, vol. 80(2), pages 97-103, May.
    6. Tibor Scitovsky, 1954. "Two Concepts of External Economies," Journal of Political Economy, University of Chicago Press, vol. 62, pages 143-143.
    7. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 71-102, October.
    8. Peter Carroll & Eduardo Pol & Paul Robertson, 2000. "Classification of Industries by Level of Technology: An Appraisal and some Implications," Prometheus, Taylor & Francis Journals, vol. 18(4), pages 417-436.
    9. Klette, T.J. & Moen, J. & Griliches, Z., 1999. "Do Subsidies to Commercial R&D Reduce Market Failures? Microeconometric Evaluation Studies," Papers 16/99, Norwegian School of Economics and Business Administration-.
    10. Bernstein, Jeffrey I. & Nadiri, M. Ishaq, 1988. "Interindustry R&D, Rates of Return and Production in High-Tech Industries," Working Papers 88-04, C.V. Starr Center for Applied Economics, New York University.
    11. Zvi Griliches, 1958. "Research Costs and Social Returns: Hybrid Corn and Related Innovations," Journal of Political Economy, University of Chicago Press, vol. 66, pages 419-419.
    12. Bernstein, Jeffrey I & Nadiri, M Ishaq, 1988. "Interindustry R&D Spillovers, Rates of Return, and Production in High-Tech Industries," American Economic Review, American Economic Association, vol. 78(2), pages 429-434, May.
    13. Adams, James D, 1990. "Fundamental Stocks of Knowledge and Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 673-702, August.
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    More about this item


    innovation; economic growth; enabling linkages approach; knowledge-based economies; novel products; efficiency-enhancing innovations;

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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