Heterogeneity and Evolutionary Change - Empirical Conception, Findings and Unresolved Issues

In this position paper we deal with the conception of heterogeneity as both the force and the result of evolutionary change. We ask, how this heterogeneity can be measured empirically and how we can get a measure which allows to get a broad comparable empirical account especially on several levels of aggregation. Based on this discussion we suggest that for several questions the measures of total factor productivity (TFP) and local changes of TFP seem to be acceptable candidates for measuring heterogeneity and its dynamics. Examples out of a number of empirical investigations applying this measures show how interesting empirical facts about evolutionary change on several levels of aggregation can be detected. The paper concludes by raising a number of unresolved issues mainly related to the question about the relationship between evolutionary dynamics on several levels of aggregation.

A new era in the dynamics of European integration?

In the previous decades, the European Union (EU) has succeeded in integrating new member countries, in economic and in political respects. Three main reasons lie behind this successful integration process: First, the solidarity of richer EU members with their poorer counterparts, second, the effectiveness of the integration policies conducted by the EU, and third, the willingness of new member countries to arouse and accomplish an economic catch-up process towards EU average levels. With the enlargement by ten new members in May 2004, the EU is facing the biggest challenge in its history. Thereby, the population of the Union will rise by 25%, while its overall GDP will increase by merely 5%. Apart from the economic problems that may emerge because of this discrepancy, further difficulties may arise because some of the new entrants are former centrally planned economies that have not yet completed their transformation processes towards free market-economies. In this paper, we want to investigate whether the Union may be moving towards a new era in the dynamics of integration. In doing so, we will analyze some of the main challenges the EU will be confronted with in the near future. In detail, we have identified two types of challenges. On the one hand, these are internal challenges, being closely related to the structural adjustments of the Union. We will further differentiate these internal challenges into economic and political ones. On the other hand, there exist external challenges that predominantly concern the competitiveness of European countries in a global context. With regard to these external challenges, we will only deal with economic aspects. One of the main findings of our analysis is that the EU will have to manage a highly difficult trade-off between the stimulation of Union-wide economic convergence and international competitiveness of its member countries. In the short-run, the process of European integration can well be deepened, given that the current controversies with regard to the financing of European support programs for poorer members and with regard to the implementation of a new constitution for the EU will be resolved. In the long-run, even if these controversies can be remedied, it appears likely that the dynamic process of European integration will not proceed as smoothly and as successfully as it did in the past. That is because the economic disparities across EU member countries have never been larger, and because the "development funds" now need to be distributed among a larger number of countries than in the past. Apart from these difficulties, it can be expected that the concentration on intra-European integration processes will be harmful to the international competitive strength of the entire Union, especially when this colossus confederation fails to take account of the economic desires of its strongest members. Certainly, the strongest nations within the Union are exposed to the pressures of international competition among highly developed nations on the basis of innovation and productivity. This kind of competition can be described as a Schumpeterian competition. In the light of all these aspects, there are indications that a European Union of "two velocities" will emerge, whereby a core of countries will mainly pursue the objective to strengthen their international competitiveness, while the remaining members will be struggling to accomplish an economic catch-up process to intra-European standards.economic integration, macroeconomic development, technological change

Principles of Neo-Schumpeterian Economics

Within the last 25 years large progress has been made in Neo-Schumpeterian Economics, this branch of economic literature which deals with dynamic processes causing qualitative transformation of economies basically driven by the introduction of novelties in their various and multifaceted forms. By its very nature, innovation and in particular technological innovation is the most exponent and most visible form of novelty. Therefore it is not very surprising that Neo-Schumpeterian Economics today has its most prolific fields in the studies of innovation and learning behavior on the micro-level of an economy, the studies on industry dynamics on the meso-level and studies of innovation driven growth and competitiveness on the macro-level of the economy. From a general point of view, however, the future developmental potential of socio-economic systems i.e. innovation in a very broad understanding encompassing besides technological innovation also organizational, institutional and social innovation has to be considered as the normative principle of Neo-Schumpeterian Economics. In this sense, innovation plays a similar role in Neo-Schumpeterian Economics like prices do in Neoclassical Economics. Instead of allocation and efficiency within a certain set of constraints, Neo-Schumpeterian Economics is concerned with the conditions for and consequences of a removal and overcoming of these constraints limiting the scope of economic development. Thus, Neo-Schumpeterian Economics is concerned with all facets of open and uncertain developments in socio-economic systems. A comprehensive Neo-Schumpeterian approach therefore has to consider not only transformation processes going on e.g. on the industry level of an economy, but also on the public and monetary side of an economic system. Our contribution introduces those extensions and complements to a comprehensive Neo-Schumpeterian economic theory, and develops some guideposts in the sense of a roadmap for necessary strands of analysis in the future in order to fulfill the claim of becoming a comprehensive approach comparable to neoclassical theory.Neo-Schumpeterian economics, industrial dynamics, public finance, financial markets

Recent Trends in the Research on National Innovation Systems

In this paper, we give an overview on recent developments in the research on national innovation systems (NIS). Essentially, we identify three development lines of the concept. These are policy-oriented studies that frequently combine the NIS approach with the terminology of corporate benchmarking, contributions to formalize the concept of NIS through descriptive or analytical models, and NIS studies of countries beyond the group of highly industrialized economies. It follows from the analysis of these research trends that the concept has developed in distinctive directions. In international comparisons of innovation systems, heterogeneity in the structure of the systems is only marginally taken into account, an aspect that may reduce the explanatory power of such system-level comparisons. Contrary to this, historically grown organizational and institutional structures are extensively described and considered in NIS studies of industrializing countries, a characteristic which ties up with early studies of national innovation systems.innovation, national innovation systems, comparative studies

Applying a Comprehensive Neo-Schumpeterian Approach to Europe and its Lisbon Agenda

The paper shows that Comprehensive Neo-Schumpeterian Economics (CNSE) is an adequate theoretical approach accompanying the enforcement of the aims of the Lisbon Agenda. The CNSE approach is based on the principle of innovation and the idea of future orientation penetrating all spheres of economics which can be summarized in three domains of economic life: industry, finance and public sector, the 3-pillars of CNSE. The CNSE approach is applied to an empirical study of 18 OECD countries using a three step procedure: In a first step country patterns of pillars are identified in a cluster analysis. This gives a fine grained picture of institutional and structural set-ups for the countries under study. In a second step within the pillar clusters a performance analysis is exercised in order to rank the countries. Because of the similarities of countries within a cluster this comparative analysis can be done whereas for countries belonging to different clusters this comparison would lead to wrong conclusions. In a final step as a crude representation of macro-economic performance the cluster composition is sorted by the average growth rates of the economies. This allows a first correlation of pillar composition and growth performance.Lisbon Agenda, Comprehensive Neo-Schumpeterian Economics, European Country Patterns, future-oriented indicator-based model

Manifesto for Comprehensive Neo-Schumpeterian Economics

Within the last 25 years large progress has been made in Neo-Schumpeterian Economics, this branch of economic science which deals with dynamic processes causing qualitative transformation of economies basically driven by the introduction of novelties. By its very nature, technological innovation is the most exponent and visible form of novelty. However, Neo-Schumpeterian Economics should be concerned with all facets of open and uncertain developments. A Comprehensive Neo-Schumpeterian approach has to consider not only transformation processes going on on the industry level of an economy, but also those on the public and monetary realms. Our manifesto introduces these extensions and complements towards a Comprehensive Neo-Schumpeterian economic theory, and develops some guideposts in the sense of a roadmap for necessary strands of analysis in the future.Neo-Schumpeterian economics, industrial dynamics, public finance, financial markets

Die treibenden Kräfte in modernen Volkswirtschaften: zum 50. Todestag von Joseph Alois Schumpeter

50 Jahre nach Joseph A. Schumpeters Tod am 8. Januar 1950 ist sein wissenschaftliches Werk noch immer von aktueller Relevanz. Professor Horst Hanusch, Generalsekretär der Internationalen Joseph A. Schumpeter Gesellschaft, würdigt das Werk des bedeutenden Ökonomen

Revolutionary developments in the world economy

In the last decades the world changed dramatically. From a global point of view three disruptive processes are on their way which can be called revolutionary: a political, a technological and an economic revolution. This paper aims to give an overview when and how these movements started what the essence of these processes is and with which consequences we will have to deal with in the future. Concerning the political revolution the year 1990 can be characterized as a historical landmark because of two reasons: At first, it finished with orthodox communism as it was practiced primarily in the former Soviet Union. Secondly, this year created a new illusion which is described at its best by Francis Fukuyama in his book "The End of History" (1990). The Western form of a liberal representative democracy had overruled communism as its most important counterpart and it promised to stay forever as a political system when combined with a capitalistic market economy. That means in last consequence "the end of history".The paper shows how this illusive thinking has been demolished in the last twenty years and in which way a new regime of political thinking, the "autocratic system" of political decision making, is gaining relevance worldwide in developed as well as in developing countries. Starting in China and spreading over to other countries in the second half of the last century it now even reached countries in Europe which after 1990 tried to install a liberal representative democracy with great empathy, for instance Russia, Hungary, the Czech Republic and recently also Poland. The paper tries to grasp this process, to find answers why the attractiveness of the democratic ideal is fading away in these days and to show which consequences this political transformation process might have for the global economy. The last two decades of the 20 th century set off a third great wave of technological invention and disruptive innovation, the "digital revolution". Radical advances in computing-, information- and communication-technology may deliver a similar mixture of transformation as societies had experienced in the centuries before, getting acquainted to the steam engine, electricity, the telegraph and telephone for instance. The larger part of economists and scientists today sticks to the opinion that this new technological revolution will change fundamentally essential characteristics of the three pillars which constitute a socio-economic system: the financial, the public and the real sector. [...

On the patterns of behaviour in digitalized societies

The study intends (1) to look at the importance of individual rationality as the main principle of economic behaviour, incorporated best in the concept of "homo oeconomicus". (2) to show how the third technological revolution, the "digitalization of society", may transform individual behaviour in the three pillars of an economic system (real, financial, public). One major achievement of main stream economics of Western style is the "homo oeconomicus". Behind this concept stands the idea of rational man relevant for all parts in economic systems. It allows a consequent application of profit and efficiency maximizing in the real and financial sector and of vote and utility maximization in the public sector as agents' behaviour. Psychology, sociology, behaviourism, anthropology are strictly against the idea of the "homo oeconomicus". Evolutionary and Neo-Schumpeterian Economics also claim that it is wrong because it doesn't allow to include uncertainty considerations which are a condition sine-qua-non for innovation, change and prosperity. But, is this concept completely wrong? Or is it perhaps relevant for specific parts of an economic system, if they develop within the process of digital revolution? These are the questions which will be tackled in the paper. The analysis will follow a comprehensive approach, looking at the three institutional pillars of an economy, the financial, the real and the public sector trying to work out the effects of digitalization on the patterns of behaviour. All in all, the effects of digitalization can be summarized as follows: In the financial pillar it modifies the culture of doing business from "symbiotic capitalism" to "financial capitalism" with prevailing olympic rationality. In the industrial pillar it induces changes from short term maximizing "managerial capitalism" to a long term oriented "entrepreneurial capitalism". In the public pillar it may open ways to institutional change, at least partially, from a "bureaucratic tax state" to a system of "social capitalism" with high potentials for enabling individual creativity and resilience capabilities

Die treibenden Kräfte in modernen Volkswirtschaften: zum 50. Todestag von Joseph Alois Schumpeter

50 Jahre nach Joseph A. Schumpeters Tod am 8. Januar 1950 ist sein wissenschaftliches Werk noch immer von aktueller Relevanz. Professor Horst Hanusch, Generalsekretär der Internationalen Joseph A. Schumpeter Gesellschaft, würdigt das Werk des bedeutenden Ökonomen. --