Essays in Honor of John Dunning
Edited by H. Peter Gray
Chapter 5: A Theory of Systemic Adjustment and Economic Growth: The Case of Finland
Timo J. Hämäläinen INTRODUCTION The world economy is currently going through a major techno-economic paradigm shift. The rapid development and diﬀusion of new information technologies and organizational arrangements has challenged the old economic and social structures of industrialized countries. The structural change, in turn, is calling into question the established social theories and ideologies which were developed in very diﬀerent circumstances. Indeed, borrowing from Thomas Kuhn, there are today clear signs of a paradigm crisis in many disciplines of social sciences including economics, sociology and management science (see e.g. Heilbroner and Milberg, 1997; Beck, 1998). According to Kuhn, debates among diﬀerent schools of thought, such as the recent on the ‘New Economy’, are typical for periods of paradigm crisis (Kuhn, 1975). The current transformation has not left the established growth theories intact. In particular, the systemic change that touches all parts of society challenges theories which focus only on few determinants of growth and competitiveness and neglect many other important factors (Hämäläinen, 2002). The neoclassical growth theories have tended to assume that the market mechanism organizes economies eﬃciently. This has led to an emphasis on the accumulation of diﬀerent types of productive resources: natural, physical and human (Rostow, 1990a). This input-driven approach tends to gloss over the technological, organizational, political and institutional factors that determine the eﬃciency with which those inputs are used in the economy (Gray, 1999). This is problematic in the highly specialized, complex and knowledge-intensive...
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