The Process of Economic Development: Introducing Some Stylized Facts and Theories on Technologies, Firms and Institutions* GIOVANNI DOSI", CHRISTOPHER FREEMAN15 and SILVIA FABIANI C ("Department of Economics, University of Rome 'La Sapienza', Rome, Italy, b SPRU, University of Sussex, Brighton, UK and MERIT, University of Limburg, Maastricht, The Netherlands and c University of Cambridge, UK)
This special issue of Industrial and Corporate Change brings together diverse streams of analysis on the determinants and characteristics of growth and development. (Here and throughout we accept the distinction between the two put forward in Nelson's article, in this volume, whereby 'growth' is that idealization of economic dynamics in which 'things simply get bigger or smaller or stay the same size', while 'in development, a lot of qualitative changes are also happening'. Needless to say, in this definition, development analyses are by no means confined to less developed countries.) 2 Despite the variety of the perspectives represented in this volume, most of - the articles display at least two unifying themes. The first one is the emphasis | on development as a multifaceted process that demands the investigation of z the conditions allowing it to take off and to be self-sustained. The second "2 theme is the importance of technological change, of firms' characteristics and | behaviours and of institutions, in shaping specific development patterns. These two themes, by themselves, set also a huge research agenda for > | J 1 .5 I i • This paper, ai well as that by G. Dosi, S. Fabiam, R. Aveni and M. Meacci in thu same issue of ICC, draws on Dosi a at. (1993)- The list of'stylized facts' is enriched by some drawn from K. Arrow and G. Dosi, 'A few stylized facts and puzzles for economic analysis', unpublished communication, Santa Fe Institute, Santa Fe, NM. Earlier versions containing some of these ideas as well as initial explorations of the model of Dosi—Fabiani—Aversi—Meacci's paper appear in Pasinetti and Solow (1994) and Soete and Silrerberg (1994). © Oxford University Press 1994
The Process of Economic Development
which the contributions that follow can only be considered as sparse elements of a much larger picture still awaiting to be drawn. Indeed, an important achievement would already be to show how the different pieces of the puzzle could in principle hold together. Until recently, technologies, firms and institutions had all three been strikingly absent from the core of the economists' explanation of growth patterns. (Development theories followed a somewhat different course but in so far as they relied on the analytic apparatus of the economist, they, too, often referred back to variants of the standard growth model—in a shorthand, of the Solow-type.) On the contrary, the view underlying the contributions to this volume—a view held by many other scholars in different quarters of social sciences—is that the interpretation of growth and development requires a detailed understanding of how technological innovations are generated and diffused; of the incentive structure facing economic actors; of the internal organization, competences and strategies of business firms; of the institutions in which agents are embedded and which constrain and guide both microeconomic coordination and change. It seems to us that the neglect of these variables, as once Richard Nelson put it, would be like trying to write a detective story without the detective, the murder, the murderer . . . A Test Case: The Determinants of Convergence and Divergence A good point of departure to illustrate the tension between alternative interpretations regards the question of 'why growth rates differ'—as the famous contribution by Denison and Poullier (1967) was entitled. Certainly, economists have put a good deal of effort into answering that question. Equally, economic historians such as Landes (1969), Rosenberg (1976, 1982),...
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