Resource title

The Evolution of an Industrial Sector with a Varying Degree of Roundaboutness of Production

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Resource description

The evolutionary model presented in this paper depicts an industrial sector with a varying degreeof economic roundaboutness, i.e. vertical division of labour between producers and users ofdifferent types of intermediate products that are ultimately used for the production of a single finalproduct. To include this vertical aspect of industrial dynamics, the model adds the concept ofproduction trees to the evolutionary models of Schumpeterian competition. The specification ofthis concept suggests the use of the notions of graph theory and the related algorithms ofcomputer science in the treatment of industrial novelty, including structural innovations. Althoughthe model is developed within the Nelson and Winter tradition, the introduction of the 'Austrian'issue of roundaboutness implies a major extension of the research agenda, including production-structure innovations, the emergence and functioning of markets for intermediate products,ways of coping with the instability of upstream markets, the spread of the effects of an upstreaminnovation, and the measurement of the degree of roundaboutness and of overall productivity. Themodel reflects a Schumpeterian version of the Böhm-Bawerkian vision of the emergence ofincreased long-term roundaboutness of production. The Schumpeterian approach implies aninnovation- and entrepreneur-driven process of vertical disintegration and reintegration.

Resource author

Esben Sloth Andersen

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Resource language

eng

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application/pdf

Resource resource URL

http://hdl.handle.net/10398/8121

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