The Changing Determinants of Economic Performance in the World Economy
New Horizons in Institutional and Evolutionary Economics series
Chapter 3: Analytical framework
In Chapter 1, we used the metaphor of ‘blind men’ and the ‘elephant’ to describe the narrow perspectives of previous competitiveness research. Today, such fragmented research approaches are neither theoretically nor politically satisfactory because modern economies are highly specialized and complex systems where ‘everything depends on everything else’. Such complex and highly interdependent economic systems should be approached from a more systemic and holistic perspective; one that incorporates all key determinants of economic competitiveness and growth. We introduce such a systemic framework in this chapter. 1 NATURE OF THE ECONOMIC SYSTEM Building a systemic framework of economic competitiveness and growth is not an easy task if one wants to stay within the paradigm of neoclassical economics. Its market-based and institution-free analysis has very little to offer for our purposes. Hence we must look to non-conventional economists such as Koopmans and Montias (1971), Pelikan (1987), Hollingsworth and Boyer (1997a) and Sabel (1997); or even further to sociologists and management scholars such as Talcott Parsons (1960, 1966, 1971) and Richard Whitley (1992a, 1992b), who have taken the systemic view of economy and society as their starting point. The works of these scholars suggest that economic systems are composed of the following main parts: 1. Different types of organizations at different levels of the system. 2. Specific input resources, productive technologies, organizational arrangements and output markets associated with each organization. 3. Different kinds of interaction and interdependencies among these organizations. 4. A differentiated and multi-level system of values and institutional norms which regulates...
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