Abstract
In this work, we draw upon the Neo-Schumpeterian concept of sectoral systems of innovation to reflect on the uneven sectoral patterns of productivity growth observed in modern economies. Inspired by recent contributions within evolutionary economic theory, we present a formal proposal to integrate uneven sectoral productivity growth in a multisectoral growth model. In this model, certain demand-side elements turn out to be crucial. More precisely, we explore the interactions between technological factors, income growth, and distinct income elasticities of sectoral demand underlying structural change. Thereby, we obtain a representation of economic growth as a long-run property which emerges from complex interactions between sectoral innovation, and certain (often-overlooked) demand-side fundamentals.
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Appendix: List of Symbols
Appendix: List of Symbols
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\( {\widehat{q}}_j(t) \): labor-productivity growth rate in sector j.
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\( {q}_j=\frac{Q_j}{L_j} \): labor productivity in sector j.
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n: number of sectors in the economy.
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\( {\alpha}_j{e}^{-{\delta}_jt} \): New firms’ contribution to sectoral productivity growth.
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\( \left(1-{e}^{-{\delta}_jt}\right){\beta}_j{e}^{-{\varepsilon}_jt} \): Incumbents’ contribution to sectoral productivity growth through formal R&D activities.
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\( \left(1-{e}^{-{\delta}_jt}\right)\left(1-{e}^{-{\varepsilon}_jt}\right){\gamma}_j \): contribution to productivity growth through learning by doing.
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g j: sectoral output growth rate in j.
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\( \widehat{q} \): overall rate of labor productivity (or income per capita \( q=\left(\frac{Q}{L}\right) \)) growth.
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ϕ j: Income elasticity of sectoral demand (sector j).
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\( {s}_j=\frac{Q_j}{Q} \): output share of sector j in global GDP.
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g = ∑s j g j: GDP growth rate (rate of economic growth).
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\( {\omega}_j=\frac{s_jq}{q_j} \): relationship between productivities and output shares.
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Almudi, I., Fatas-Villafranca, F. (2019). Innovation, Structural Change and Multisectoral Economic Growth. In: Chai, A., Baum, C. (eds) Demand, Complexity, and Long-Run Economic Evolution. Economic Complexity and Evolution. Springer, Cham. https://doi.org/10.1007/978-3-030-02423-9_9
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