, Volume 6, Issue 1, pp 39-53

Linkages, Thresholds, and Development

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Growth is rarehistorically, with short expansions interspersed with long periodsof stasis. We examine how well this can be explained by a generalclass of Schumpeterian growth models that treat development asa progress through a space of commodities, from simple to morecomplex goods. This process of sequential innovation in a partiallyordered network of commodities is called linkage formation. The central result of this article is thatSchumpeterian growth models exhibit generic threshold behavior.Below a critical probability of linkage formation, developmentgradually ceases. Above the critical probability, innovationcontinues with probability one.