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The co-evolution of innovation, demand and growth

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  • Pier Paolo Saviotti
  • Andreas Pyka

Abstract

In order to explain long-run economic development, we analyse in this paper the interplay between supply-side and demand-side processes. On the supply side, three different innovation processes are observed and interact: (i) growing productive efficiency, (ii) the emergence of new sectors and (iii) the increasing quality and differentiation of existing products. On the demand side, we analyse the meaning of disposable income and varying preference systems. The analysis is undertaken with the help of a numerical model of economic growth by the emergence of new industries. Our results show that the time path of economic development which we observe could not have been generated by taking into account a supply-side-based view on innovations alone. Without making reference to the formation of an adequate demand, development processes cannot be explained. The three processes need to be combined because each one individually would not suffice to generate long-run economic development. However, only with the formation of an adequate demand long-run economic development becomes sustainable.

Suggested Citation

  • Pier Paolo Saviotti & Andreas Pyka, 2013. "The co-evolution of innovation, demand and growth," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 22(5), pages 461-482, July.
    • Handle: RePEc:taf:ecinnt:v:22:y:2013:i:5:p:461-482
    DOI: 10.1080/10438599.2013.768492
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    References listed on IDEAS

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    1. Andreas Pyka & Uwe Cantner & Alfred Greiner & Thomas Kuhn (ed.), 2009. "Recent Advances in Neo-Schumpeterian Economics," Books, Edward Elgar Publishing, number 12982.
    2. Pier P. Saviotti, 1996. "Technological Evolution, Variety and the Economy," Books, Edward Elgar Publishing, number 727.
    3. Carlota Perez, 2002. "Technological Revolutions and Financial Capital," Books, Edward Elgar Publishing, number 2640.
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    Cited by:

    1. Marianna Epicoco & Magali Jaoul-Grammare & Anne Plunket, 2022. "Radical technologies, recombinant novelty and productivity growth: a cliometric approach," Journal of Evolutionary Economics, Springer, vol. 32(2), pages 673-711, April.
    2. Richard Nelson, 2015. "Understanding long run economic development as an evolutionary process," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(1), pages 11-29, April.
    3. Dario Guarascio & Mario Pianta & Francesco Bogliacino, 2017. "Export, R&D and New Products: A Model and a Test on European Industries," Economic Complexity and Evolution, in: Andreas Pyka & Uwe Cantner (ed.), Foundations of Economic Change, pages 393-432, Springer.
    4. Hötte, Kerstin, 2023. "Demand-pull, technology-push, and the direction of technological change," Research Policy, Elsevier, vol. 52(5).
    5. Kurt Dopfer & Jason Potts & Andreas Pyka, 2017. "Upward and Downward Complementarity: The Meso Core of Evolutionary Growth Theory," Economic Complexity and Evolution, in: Andreas Pyka & Uwe Cantner (ed.), Foundations of Economic Change, pages 69-80, Springer.
    6. Marianna Epicoco, 2021. "Technological Revolutions and Economic Development: Endogenous and Exogenous Fluctuations," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(3), pages 1437-1461, September.
    7. Rinaldo Evangelista, 2018. "Technology and Economic Development: The Schumpeterian Legacy," Review of Radical Political Economics, Union for Radical Political Economics, vol. 50(1), pages 136-153, March.
    8. Marianna Epicoco, 2021. "Technological Revolutions and Economic Development : Endogenous and Exogenous Fluctuations," Post-Print hal-03588838, HAL.
    9. Yoshinori Shiozawa, 2020. "A new framework for analyzing technological change," Journal of Evolutionary Economics, Springer, vol. 30(4), pages 989-1034, September.
    10. Cristiano Antonelli & Agnieszka Gehringer, 2015. "The competent demand pull hypothesis: which sectors do play a role?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(1), pages 97-134, April.
    11. George Liagouras, 2017. "The challenge of Evo-Devo: implications for evolutionary economists," Journal of Evolutionary Economics, Springer, vol. 27(4), pages 795-823, September.
    12. Carlos A. Carrasco & Edgar Demetrio Tovar-García, 2021. "Trade and growth in developing countries: the role of export composition, import composition and export diversification," Economic Change and Restructuring, Springer, vol. 54(4), pages 919-941, November.
    13. Chai Andreas & Moneta Alessio, 2014. "Escaping Satiation Dynamics: Some Evidence from British Household Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(2-3), pages 299-327, April.
    14. Samuel MENG, 2018. "How to build an economy free of recession and stagnation: results from a multi-commodity macro model," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(615), S), pages 69-104, Summer.

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