2018/27 | LEM Working Paper Series | ||||||||||||||||
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Capabilities Accumulation and Development: What History Tells the Theory |
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Giovanni Dosi and Xiaodan Yu |
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Keywords | |||||||||||||||||
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catching-up, capability accumulation, innovation, development, Great Transformation
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Abstract | |||||||||||||||||
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In this contribution we offer a broad overview of the technological,
institutional and policy dynamics associated with the great
transformation - borrowing Karl Polanyi (1944) expression - leading
from traditional, mostly rural, economies to economies driven by
industrial activities (and nowadays also advanced services), able to
systematically learn how to implement and eventually how to generate
new ways of producing and new products under conditions of dynamic
increasing returns. Such a `great transformation' entails a major
process of accumulation of knowledge and capabilities, both at the
levels of individuals and organizations. Certainly, part of such
capabilities builds on education and formally acquired skills (what
in the economists' jargon often goes under the heading of `human
capital'). However, at least equally important, capabilities have to
do with the problem-solving knowledge embodied in organizations -
concerning e.g. production technologies, the technical and social
division of labor, labor relations as well as `dynamic capabilities'
of search and learning. In turn, the rates and directions of
knowledge accumulation during the catch-up process and the ensuing
effects upon the patterns of production and trade are shaped by the
economic and institutional framework in which such processes are
embedded.
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