i Modern Evolutionary Economics Evolutionary economics sees the economy as always in motion with change being driven largely by continuing innovation This approach to economics, heavily influenced by the work of Joseph Schumpeter, saw a revival as an alternative way of thinking about economic advancement as a result of Richard Nelson and Sidney Winter’s seminal book, An Evolutionary Theory of Economic Change, first published in 1982 In this long-awaited follow-up, Nelson is joined by leading figures in the field of evolutionary economics, reviewing in detail how this perspective has been manifest in various areas of economic inquiry where evolutionary economists have been active Providing the perfect overview for interested economists and social scientists, readers will learn how in each of the diverse fields featured, evolutionary economics has enabled an improved understanding of how and why economic progress occurs Richard R. Nelson is Professor Emeritus at Columbia University He served as a research economist and analyst at the Rand Corporation and the US President’s Council of Economic Advisors His most cited publications include his book with Sidney Winter, An Evolutionary Theory of Economic Change (1982), The Moon and the Ghetto (1977), and National Innovation Systems (1993) He has received the Honda Prize, the Tinbergen Award, the Leontief Award, and the Veblen-Commons Award for his research, and has been awarded an honorary degree by several universities Downloaded from https://www.cambridge.org/core University College London (UCL), on 28 Apr 2018 at 18:31:46, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms https://doi.org/10.1017/9781108661928 ii Downloaded from https://www.cambridge.org/core University College London (UCL), on 28 Apr 2018 at 18:31:46, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms https://doi.org/10.1017/9781108661928 ii Modern Evolutionary Economics An Overview Ric h a rd R. Nelson Columbia University, New York G iova nni Dosi Scuola Superiore Sant’Anna in Pisa C o n stance E. Helfat Dartmouth College, New Hampshire A n d reas Pyk a University of Hohenheim Sid n ey G. Winter Wharton School, University of Pennsylvania Pier Paolo Saviot ti Utrecht University Keu n  Lee Seoul National University Fra n c o Malerb a Bocconi University Ku r t Dopfer University of St. Gallen Downloaded from https://www.cambridge.org/core University College London (UCL), on 28 Apr 2018 at 18:31:46, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms https://doi.org/10.1017/9781108661928 vi University Printing House, Cambridge CB2 8BS, United Kingdom One Liberty Plaza, 20th Floor, New York, NY 10006, USA 477 Williamstown Road, Port Melbourne, VIC 3207, Australia 314–321, 3rd Floor, Plot 3, Splendor Forum, Jasola District Centre, New Delhi – 110025, India 79 Anson Road, #06-04/06, Singapore 079906 Cambridge University Press is part of the University of Cambridge It furthers the University’s mission by disseminating knowledge in the pursuit of education, learning, and research at the highest international levels of excellence www.cambridge.org Information on this title: www.cambridge.org/9781108427432 DOI: 10.1017/9781108661928 © Richard R. Nelson 2018 This publication is in copyright Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press First published 2018 Printed in the United Kingdom by Clays Ltd A catalogue record for this publication is available from the British Library Library of Congress Cataloging-in-Publication Data Names: Nelson, Richard R., author Title: Modern evolutionary economics : an overview / Richard R. Nelson [and eight others] Description: Cambridge, United Kingdom; New York, NY: Cambridge University Press, 2018 | Includes bibliographical references and index Identifiers: LCCN 2018000013 | ISBN 9781108427432 (hardback) | ISBN 9781108446198 (paperback) Subjects: LCSH: Evolutionary economics Classification: LCC HB97.3.N45 2018 | DDC 330.1–dc23 LC record available at https://lccn.loc.gov/2018000013 ISBN 978-1-108-42743-2 Hardback ISBN 978-1-108-44619-8 Paperback Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication and does not guarantee that any content on such websites is, or will remain, accurate or appropriate Downloaded from https://www.cambridge.org/core University College London (UCL), on 28 Apr 2018 at 18:31:46, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms https://doi.org/10.1017/9781108661928 v Contents List of Figures Notes on Contributors Economics from an Evolutionary Perspective Richard R. Nelson Technological Advance as an Evolutionary Process Giovanni Dosi and Richard R. Nelson Appendix to Chapter 2:  Formal Modeling of Problem Solving and Knowledge Accumulation Giovanni Dosi The Behavior and Capabilities of Firms Constance E. Helfat page vii ix 35 74 85 Schumpeterian Competition and Industrial Dynamics Andreas Pyka and Richard R. Nelson 104 129 Appendix to Chapter 4:  History-Friendly Modeling Sidney G. Winter Evolutionary Perspectives on Long Run Economic Development Andreas Pyka, Pier Paolo Saviotti, and Richard R. Nelson Appendix to Chapter 5:  The Pyka–​Saviotti Growth Model Andreas Pyka and Pier Paolo Saviotti 143 168 v Downloaded from https://www.cambridge.org/core UCL, Institute of Education, on 26 Apr 2018 at 16:38:05, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms https://doi.org/10.1017/9781108661928 vi vi Contents Economic Catch-​up by Latecomers as an Evolutionary Process Keun Lee and Franco Malerba The Evolution of Evolutionary Economics Kur t Dopfer and Richard R. Nelson 172 208 References 231 Index 263 Downloaded from https://www.cambridge.org/core UCL, Institute of Education, on 26 Apr 2018 at 16:38:05, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms https://doi.org/10.1017/9781108661928 vi Figures 4.1 Stylized facts of industry life cycles page 114 A.4.1 Herfindahl in PC and mainframe markets (standard set) 141 5.1 Output per worker hour generated by the Nelson–Winter model (lower line) and actual time series of real GNP per man hour (upper line) 151 A.5.1 Emergence of new industries in a multisector model (TEVECON), aggregate employment, and income growth 169 A.5.2 Emergence of new industries in South Korea (Yeon, Pyka, and Kim, 2016) 171 vii Downloaded from https://www.cambridge.org/core UCL, Institute of Education, on 26 Apr 2018 at 16:40:00, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms https://doi.org/10.1017/9781108661928 vi Downloaded from https://www.cambridge.org/core UCL, Institute of Education, on 26 Apr 2018 at 16:40:00, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms https://doi.org/10.1017/9781108661928 xi Notes on Contributors Kurt Dopfer is a Professor at the Department of Economics, University of St Gallen, Switzerland, where he is also Chair of International Economics and Development Theory, Co-director of the Institute of Economics, a member of the University Senate, Emeritus, and a researcher for the Swiss National Science Foundation He has published several books and numerous articles in twelve languages and has been a member of the editorial board of several journals, including the Journal of Evolutionary Economics Giovanni Dosi is Professor of Economics and Director of the Institute of Economics at The Sant’Anna School of Advanced Studies, Pisa, and serves as Director of the Industrial Policy and Intellectual Property Rights task forces at the Initiative for Policy Dialogue at Columbia University Professor Dosi is a continental Europe editor of the journal Industrial and Corporate Change A selection of his works has been published as Innovation, Organization and Economic Dynamics (2000) and Economic Organization, Industrial Dynamics and Development (2012) Constance E.  Helfat is the J.  Brian Quinn Professor in Technology and Strategy at the Tuck School of Business at Dartmouth College, New Hampshire She has published widely in academic journals and books, and co-authored Dynamic Capabilities:  Understanding Strategic Change in Organizations (2007) She is a Fellow of the Strategic Management Society, and has received the Distinguished Scholar Award from the Technology and Innovation Management Division of the Academy of Management, the Viipuri Prize, and an honorary degree She currently serves as co-editor of Strategic Management Journal ix Downloaded from https://www.cambridge.org/core UCL, Institute of Education, on 26 Apr 2018 at 16:42:22, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms https://doi.org/10.1017/9781108661928 ... including the Journal of Evolutionary Economics Giovanni Dosi is Professor of Economics and Director of the Institute of Economics at The Sant’Anna School of Advanced Studies, Pisa, and serves as Director... University Press, 2016) He is an editor of Industrial and Corporate Change, an advisory editor of Research Policy, and an associate editor of Journal of Evolutionary Economics Andreas Pyka is a Professor... traditional in economics, and readers will be assumed to have at least a rough understanding of these And the significant differences between evolutionary and neoclassical economics will stand out more