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Creative Destruction and the Measurement of Productivity Change

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  • John Stanley Metcalfe
  • Ronnie Ramlogan

Abstract

Recent advances in the measurement of productivity change have exposed a much clearer picture of the turbulent dynamics of restless capitalism. This essay has two objectives. First, to show that the population method drawn from evolutionary theory provides a coherent frame in which the various processes impinging on productivity change can be integrated. Secondly, to identify some of the puzzles and ambiguities that arise from decomposing any aggregate measure of productivity growth into innovation effects in firms and selection effects in markets. We shall also show that there is no unique way of making this decomposition. This is an important matter because the transmission process between innovation and changing resource allocation underpins the process of economic development in the broad sense. JEL Classification: D24, E11, O30, O40.

Suggested Citation

  • John Stanley Metcalfe & Ronnie Ramlogan, 2006. "Creative Destruction and the Measurement of Productivity Change," Revue de l'OFCE, Presses de Sciences-Po, vol. 97(5), pages 373-397.
    • Handle: RePEc:cai:reofsp:reof_073_0373
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    References listed on IDEAS

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    Cited by:

    1. J. Stan Metcalfe & John Foster, 2010. "Evolutionary Growth Theory," Chapters, in: Mark Setterfield (ed.), Handbook of Alternative Theories of Economic Growth, chapter 3, Edward Elgar Publishing.
    2. Esben Andersen & Jacob Holm, 2014. "The signs of change in economic evolution," Journal of Evolutionary Economics, Springer, vol. 24(2), pages 291-316, April.
    3. Uwe Cantner & Ivan Savin & Simone Vannuccini, 2019. "Replicator dynamics in value chains: explaining some puzzles of market selection," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(3), pages 589-611.
    4. John Metcalfe, 2008. "Accounting for economic evolution: Fitness and the population method," Journal of Bioeconomics, Springer, vol. 10(1), pages 23-49, April.
    5. Luna, Ivette & de Souza Luz, Manuel Ramón & Hiratuka, Celio & Fracalanza, Paulo Sérgio, 2015. "Variação da produtividade do trabalho numa perspectiva evolucionária: aplicação da equação de Price para análise da indústria de transformação no Brasil entre 2007 e 2011 [Changes in labour product," MPRA Paper 78198, University Library of Munich, Germany.
    6. Luna, Ivette & Hiratuka, Celio & Haddad Netto, Elias Youssef, 2016. "Survival of the fittest or does size matter: What are the main drivers of Productivity in Brazil?," MPRA Paper 78208, University Library of Munich, Germany, revised 2016.
    7. Esben Sloth Andersen & Jacob Rubæk Holm, 2013. "Directional, stabilizing and disruptive selection: An analysis of aspects of economic evolution based on Price’s equation," DRUID Working Papers 13-10, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    8. Mirella Schrijvers & Niels Bosma & Erik Stam, 2022. "Entrepreneurial Ecosystems and Structural Change in European Regions," Working Papers 2202, Utrecht School of Economics.
    9. Jacob Rubæk Holm & Esben Sloth Andersen & J. Stanley Metcalfe, 2016. "Confounded, augmented and constrained replicator dynamics," Journal of Evolutionary Economics, Springer, vol. 26(4), pages 803-822, October.
    10. Andrea Filippetti & Petros Gkotsis & Antonio Vezzani & Antonio Zinilli, 2020. "Are innovative regions more resilient? Evidence from Europe in 2008–2016," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 37(3), pages 807-832, October.
    11. Uwe Cantner & Holger Graf & Ekaterina Prytkova & Simone Vannuccini, 2018. "The Compositional Nature of Productivity and Innovation Slowdown," Jena Economics Research Papers 2018-006, Friedrich-Schiller-University Jena.
    12. F.C. Stam, 2018. "Enabling Creative Destruction: An Entrepreneurial Ecosystem Approach to Industrial Policy," Working Papers 18-05, Utrecht School of Economics.

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    More about this item

    Keywords

    productivity change and evolutionary population dynamics; fisher price theorems;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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