Economic Variety. by Andreas Pyka

Transcription

1 Economc Varey by Andreas Pyka Mos economss would agree ha economcs s abou effcency n he use of resources (e.g. reach a maxmum wh gven resources). In mansream economcs he concep of homo oeconomcus only allows for effcenly acng agens. E.g. f an acor apples no he opmal (effcen) echnology he/she has o adap or wll be seleced. 2 Accordngly, nnovaon s abou ncreasng effcency. New echnologes are developed whch produce smlar producs wh a decreasng amoun of resources (process nnovaon). Concepually hs leads o he famous shf of he producon funcon. oupu nnovaon Rober Solow npu 3

2 Modern nnovaon economcs n a Schumpeeran flavor argues ha ndeed ncreasng effcency s an mporan feaure of nnovaon processes. However, besdes hs merely quanave mprovemens (producng more of he same oupu usng less of he same npus) nnovaon processes lead o mporan qualave effecs. J.A. Schumpeer 4 Examples: Quanave mprovemens (process nnovaon) learnng curve effecs ousourcng nernaonal dvson of labour 5 Examples: Qualave mprovemens (produc nnovaons) No only more applances, ools, producs are used bu very dfferen ems are n cener of neres. In parcular he number of dfferen producs used n consumpon s sharply ncreasng. Varey ncreases! and hs s a necessary condon for economc developmen 6 2

3 Innovaon processes change varey on all levels of an economy: Frs of all, on an acors level we fnd nnovang and nonnnovang acors. On a knowledge level we fnd new felds of knowledge o emerge. On a secoral level new ndusres come no scene. On a macroeconomc level we fnd dvergng growh raes beween dfferen counres. 7 Varey s n self a powerful source of nnovaon (e.g. crossferlzaon effecs leadng o new ndusres). mecharoncs Only acors wh varyng knowledgebases can suffcenly learn from each oher. opoelecroncs 8 bonformacs Neglecng economc varey wll lead economes eher no a Marxan rap, where ncreasng effcency ogeher wh sauraed demand leads o a collapse, or no cockagne, where everyhng s produced whou any npus, makng economcs (he scence of scarcy) obsolee. Of course, boh dd no happen. 9 3

4 To ge ou of hs rap, we hnk ha ncreasng effcency n preexsng secors and he ncreasng varey creaed by he emergence of new secors are wo complemenary rends n economc developmen. Savo, P.P., Pyka, A.(04), Economc Developmen by he Creaon of new Secors, Journal of Evoluonary Economcs, Vol. 4, Issue, 04,36 Two hypoheses concernng economc varey and economc developmen: Hypohess : The growh n varey s a necessary requremen for longerm economc developmen. Hypohess 2: Varey growh, leadng o he developmen of new secors, and effcency growh n preexsng secors are complemenary and no ndependen aspecs of economc developmen. Lug Pasne If producvy keeps ncreasng whle he demand for new goods and servces reaches a sauraon pon, an mbalance arses. If he economy were consued by a consan se of acves, n presence of growng producvy would become possble o produce all demanded goods and servces wh a decreasng proporon of he resources used as npus, ncludng labour. 2 4

5 How o ge ou of hs boleneck? The addon of new goods and servces o he economc sysem, ha s, a change n composon leadng o a growh n varey, can be a form of compensaon for he poenal dsplacemen of labour and of oher resources. Varey growh s hen requred for he long erm connuaon of economc developmen. 3 Bu how are new producs and servces generaed? New goods and servces leadng o new ndusral secors can only be generaed by means of search acves. 4 And where do he resources for he search acves come from? The resources can only come from he ncreases n producvy n preexsng secors n a way smlar o wha happened durng he process of ndusralzaon when producvy growh n agrculure creaed he resources requred for ndusralzaon (Kuznes, 965). Smlarly, producvy growh n preexsng secors creaes he resources requred for search acves and hus for he generaon of new producs and servces. S. Kuznes 5 5

6 In Schumpeeran Terms: The growng producvy of he rounes consung he crcular flow creaes he resources requred for nnovaon, whou whch economc developmen would come o a hal. 6 Concluson: Economc Creavy Boh growng effcency and growng varey are requred f economc developmen s o proceed. We call he rend owards growng varey he creavy of he economc sysem. Thus, we can reformulae our prevous saemen by sayng ha effcency growh and varey growh are wo complemenary rends n economc developmen. 7 Economc developmen by he creaon of new secors P.P. Savo A model n whch he number of new secors vares endogenously durng economc developmen Secor creaed by an mporan nnovaon esablshng an adjusmen gap (sze of he poenal marke) 8 6

7 Model The general mechansm: Frs enrepreneur eners he marke (expecaon of a emporary monopoly) hen maors ener rsng nensy of compeon nducemen for furher enry falls unl ex sars domnang enry. The orgnal nnovaon has become par of he crcular flow (Schumpeer, 92) Secor olgopoly or monopoly Schumpeeran Innovaon Compeon 9 Demand dynamcs Technology push: An adjusmen gap s creaed by an nnovaon Demand dynamcs: Adjusmen gap s gradually closed leadng o a sauraed marke The jon dynamcs of compeon and of demand gves rse o an ndusry lfe cycle (ILC) Creaon of new secors Wha s he nducemen o he creaon of new secors? The declne of maure secors nduces enrepreneurs o look for new opporunes of emporary monopoly, o be found by explong new mporan nnovaons leadng o new nches and secors. 2 7

8 Compeon () Compeon boh nra and nersecor: Inrasecor: proporonal o he densy of produc/oupu populaon. Enrepreneur nduced by expecaon of emporary monopoly o ener. If nnovaon successful maon ncreasng nensy of compeon decreasng nducemen o ener ex 22 Compeon (2) Inersecor: dfferen secors can provde comparable servces, whch s an mporan componen of conesable markes. Lms he exen of olgopoly/monopoly ha could be acheved whn ndvdual solaed secors. 23 Search acves Acves by means of whch one scans he exernal envronmen lookng for alernaves o exsng rounes (Nelson, Wner, 982). Generalzed analogue of Research and Developmen. All economc acves can be dvded no rounes and search acves. 24 8

9 The cenral model equaon dn d = k FA AG IC MA FA := fnancal avalably AG := adjusmen gap IC := nensy of compeon MA := mergers and acqusons 25 Fnancal Avalably FA fnancal resources made avalable for a secor & knowledge on busness opporunes nformed capal 26 Inensy of Compeon IC nrandusry compeon (prce compeon and maon) & nerndusry compeon (nnovaon compeon) 27 9

10 Mergers and Acqusons + Falures MA = k 9 N AG 28 Search acves SE = + k exp( k D ) 4 5 acc, SE := search acves D acc, := adjusmen gap 29 Adjusmen Gap AG AG = D max D D := Demand D max := Maxmum Demand (relaed o echnologcal opporunes and search acves) (e.g. consder he dscrepancy afer he frs compuers were avalable beween he acual demand hese days and he sze of he marke oday).

11 Demand () Y * ΔY D = p D := demand p := prce Y := servce level ΔY := produc dfferenaon 3 Demand (2) Y = + exp( k k ΔY = + exp( k k SE ) 4 5 SE ) 6 7 p = + exp( k8 k9se ) 32 Number of frms Lfe cycle: n each secor N frs ncreases rapdly, reaches a maxmum, and hen falls (olgopoly, monopoly) However, hs lfe cycle s drven purely by dynamcs of compeon and demand (dfferen o ILC models). Shape of lfe cycle affeced by several varables (AG, D ec). number of frms

12 Adjusmen gap Adjusmen Gaps 34 Inensy of compeon 6 Inensy of Compeon Aggregae employmen L secoral & oal employmen (lnear rend) secoral employmen oal employmen 36 2

13 Employmen rend vs rae of growh of servces 0 Employmen rend for varaons of k Demand expermens Increasng he rae of growh of Y (level of servces suppled) speeds up developmen rases demand, ncreases AG, changes he shape of he ILC and leads o a more posve employmen growh pah. 38 Compensaon The emergence of new secors (growng varey) can compensae for he fallng ably of maure secors o creae employmen (Hypohess ). Economc developmen can be susanable n he long run. The nernal dynamcs of each secor couns as well. 39 3

14 Creave desrucon (Schumpeer agan ) Process of ndusral muaon ha ncessanly revoluonzes he economc srucure from whn, ncessanly desroyng he old one, ncessanly creang a new one. essenal fac abou capalsm.(p.83). perennal gale of creave desrucon (p. 84) (Capalsm, Socalsm and Democracy) Inerpreaons Possble nerpreaons of creave desrucon: For every new nnovaon creaed, a prevous one dsappears (Aghon and How); hs s consdered by AH he rue Schumpeeran characer of her model. Ths mples: () Complee subsuon of old by new, () consan oupu dversy. 4 Dversy and creave desrucon They are no ncompable, bu, f varey grows here mus be more creaon han desrucon. However, even old secors whch survve are no unaffeced by he creaon of he new. Old secors/acves are ransformed by new ones. 42 4

15 Dversy and creave desrucon (2) Older secors are compressed boh n an absolue sense (sze) and n relave sense (share of employmen, oupu ec). E.g. elecronc nformaon dd no compleely subsue paper based nformaon bu oday mos nformaon s ransmed n elecronc forma. 43 Applcaon I: CoEvoluon 44 sably and sagnaon close o he ordered sae prolfc condons for evoluon close o he chaoc range Langon (990), Kauffman (993): Bologcal evoluon a he edge of chaos The logc behnd hs dea s ha n he vcny of chaos, evoluon has beer chances o succeed n creang complex and adapable srucures ha characerze bologcal lfe han eher n a very ordered sae (e.g. a crysal) or n a compleely chaoc one. 45 5

16 The possbly ha hs dea also s relevan for economc sysems was menoned bu never explored. Our am s o explore he coevoluon of echnologes and fnancal nsuons and he possbles of chaoc behavour o emerge. Quesons: Does he onse of chaos has an mpac on economc developmen? Can economc evoluon beer occur a he edge of chaos han n chaoc an prechaoc regons? 46 Coevoluon Ineracng changes n wo or more dfferen enes or varables. Coevoluon of echnologes and fnancal nsuons. Close nerrelaonshps beween he fnancal pllar and he ndusral pllar are n he core of a Comprehensve NeoSchumpeeran Approach (CNSE) (Hanusch, Pyka 07) whch consders nnovaon as he normave prncple for all domans of economc sysems (.e. he ndusral, he fnancal as well as he publc secor) 47 Coevoluon dn d = k FA AG Occurs when fnancal nsuons observe he performance of echnologes and markes and nves n hese dependng on her beer han average performance. In urn, echnologes develop more rapdly when nvesmen ncreases. IC MA Selfrenforcng effec, bu up o wha pon? Bubbles? 48 6

17 Fnancal Avalably FA = k3 [ + k ( dn dn )] x n j= j 49 Meanng of k x and k 3 k x = sensvy of fnancal nsuons o he performance of secor = Resources fnancal nsuons are prepared o allocae o secor for a gven mprovemen n performance. k 3 = resources avalable o fnancal nsuons n he economy, a fracon of whch can be allocaed o secor FA = k3 [ + k ( dn dn )] x n j= j Expermen: varyng k x hreshold Fg. (lef) Number of frms (k 3 = ; k x = 0.) Fg. 2(below): Number of frms (k 3 = ; k x = 0.2) N N N Fg. 3(rgh): Number of frms (k 3 = ; k x = 0.3) 5 7

18 Expermen: varyng k x and k 3 rasng hreshold N Fg 4 Number of frms for k x =0.2 and k 3 = 2. N Fg 5 Number of frms for k x =0.5 and k 3 = 2. Fg 6,(rgh) for k x = 0.5, k 3 = 3 N 52 Exp: Aggregae employmen aggregae employmen me Fg 7. Employmen creaon for kx = 0. and k3 = aggregae employmen me Fg 8. Employmen creaon for kx = 0.5 and k3 = aggregae employmen me Fg 9 Employmen creaon for kx = 0.35 and k3 = 53 Phase porra, employmen creaon dw +/d dw 0. +/d dw /d 0.2 dw /d Fg. 4: Phase porra for employmen creaon (kx = 0., lef, and kx = 0.2, rgh) 54 8

19 R Lyapunov exponens R Tme Fg. Lyapunovexponens (s=0) for k3 =, kx = Tme Fgure : Lyapunovexponens (s=0) for k3 =, kx = 2 55 Chaoc behavour? 3.5 k 3 k x Lyapunov Exponen Fg 2. Emergence of chaoc behavour as a resul of he jon varaon of kx and of k3. Whe regons correspond o normal behavour whle grey regons of ncreasng darkness correspond o chaoc behavour. 56 Chaos,k x, k 3 3 LyapunovExponen k x k Fg 2. Changes n he values of Lyapunov exponens as a funcon of kx and k

20 Lyapunov exponens, k x, k 3 Lyapunov varaon of k k x Chaos, employmen growh rend of employmen varaons of k growh k x Coevoluon of echnologes and fnancal nsuons Raes of economc developmen ncrease wh ncreasng fnancal resources & fnancal resources ncrease wh he prevous level of economc developmen. Useful o ncrease he economc wegh of new secors, bu susanable? Above a gven hreshold (nensy of feedback) he behavour becomes srange. Tess seem o ndcae ha s chaoc. 60

21 Economc evoluon a he edge of chaos As he chaos hreshold s aaned he economc sysem loses he capacy o creae new frms and employmen (n oher words loses s capacy o develop). In he prechaoc regon he capacy of he economc sysem o develop mproves as he chaoc hreshold s approached and collapses afer he hreshold. The bes prospecs for evoluon are a he edge of chaos. 6 Applcaon II: Compeon nra vs. ner (prce vs. nnovaon) compeon 62 Influence of compeon on sysem performance Two (deal) (oppose) ypes of compeon (exremes of a range): Schumpeeran Compeon: Do wha no one else can do (radcal nnovaon) emporary monopoly Classcal Compeon: Do he same hng as oher compeors bu beer (), () () more effcen cheaper oupu () beer qualy 63 2

22 Inensy of compeon IC = k IC N * N o N + R N II o 64 Overall IC vs IC + Inernra balance nensy of compeon k IC R 65 Rae of employmen growh vs balance nernrasecor compeon (R) for changng values of k IC. rend of employmen 0,025 0,02 0,05 0,0 0, ,02 0,04 0,06 0,08 0, 0,005 k IC R

23 Tradeoffs Inernra: predomnance of nrasecor compeon hgher probably of emporary monopoly n nches elsewhere han n esablshed secors. If only Schumpeeran compeon once secor creaed no maon Classcal compeon producon of he new good/servce + effcen (cheaper) ncreased economc wegh 67 Applcaon III: Indusry lfe cycle In our model naural consequence of he dynamcs of compeon and of demand bu no exclusve of oher cyclcal nfluences Dfferen from oher ILC models (Process R&D, Domnan desgns, Refnemen nnovaon) 68 Demand Search acves SE = + k exp( k D ) 4 5 acc, 69 23

24 Demand Search acves (2) Y = + exp( k k SE ) 4 5 ΔY = + exp( k k SE ) 6 7 p = + exp( k8 k9se ) 70 Indusry lfe cycle k4 = 5 k4 = 7.5 k4 = k4 = 2.5 k4 = k4 = 0. k4 = 0.5 k4 = k4 =.5 k4 = k5 = 0. k5 = 0.25 k5 = 0.5 k5 = 0.75 k5 = 7 Indusry Lfe Cycle The shape, duraon and exsence of he ndusry lfe cycle s grealy affeced by parameers affecng demand and search acves In some cases he shake ou vrually dsappears (exsence) 72 24

25 McroMacro dynamcs k5 = k5 = k5 = 0.0 k5 = k5 = Lnear (0.005) Lnear (0.0075) Lnear (0.025) Lnear (0.0) Lnear (0.025) 73 McroMacro dynamcs (2) The shape and duraon of he ILC affecs he macroeconomc performance of he economc sysem. Model parameers affecng demand and search acves can affec () he rae of creaon of new secors () he number of frms n each secor () he rae of growh of ndusral concenraon 74 McroMacro dynamcs (3) As consequence he effecs of parameers affecng demand and search acves are ofen nonlnear Ex: radeoff beween faser rae of creaon of new secors and smaller number of frms n each secor

26 McroMacro dynamcs (4) A sable macroeconomc growh pah requres mcroeconomc urbulence 76 Effcency vs dversy All hese (and many oher) phenomena are made possble by he complemenary combnaon of effcency and dversy More creaon han desrucon vs growng dversy Tradeoff Schumpeeran (Dversy) classcal (effcency) compeon Influence of ILC (shape ec) on macro dynamcs rae secors + secor sze

27 Some quas emprcal ess 79 Correlaon of employmen shares Correlaon of Employmen Shares e e +n Correlaon of employmen shares Fabrcan (Mecalfe, Foser) 8 27

28 Correlaon of oupu shares Correlaon of Oupu Shares z z +n Correlaon of oupu shares Fabrcan (Mecalfe, Foser) 83 Correlaon of employmen and oupu shares Correlaon of Employmen and Oupu Shares e z e +nz +n

29 Correlaon employmen & oupu shares (Fabrcan + MeFos) 85 29