Paper presented at the workshop ``Innovation, Policy and Society'' arranged by the Nordic Journal of Political Economy.

By Esben Sloth Andersen
Dept. of Business Studies, Aalborg University, esa@business.auc.dk.

Abstract

The paper presents a multisectoral evolutionary model that tries to provide elements of a micro foundation of the Pasinetti scheme of economic growth and development and at the same time to suggest the outlines of a concept of innovation systems. In the simple model the long-run consequence productivity growth in a multi-sectoral economy is that labour becomes available for the production of new consumption goods. If such goods are not available to a sufficient degree, the macroeconomic consequence is that ``technological unemployment'' will emerge. A related problem, namely that productivity growth is slow for front-end goods, does not lead to ``unemployment'' but just to a slow-down in aggregate growth. In the former case we may talk of problems of ``satiation in the narrow sense'' where there is a lack of product designs for the ``next'' goods in the hierarchy. The latter case may be related to ``satiation in the very broad sense'' where the ``next'' goods are produced with so low productivity that they function as a brake on further growth.

Keywords: Evolutionary modelling, endogenous growth and development, structural economic dynamics, innovation systems, satiation of demand.