Technological Revolutions and Financial Capital

Technological Revolutions and Financial Capital

The Dynamics of Bubbles and Golden Ages

Carlota Perez

Technological Revolutions and Financial Capital presents a novel interpretation of the good and bad times in the economy, taking a long-term perspective and linking technology and finance in an original and convincing way.

Chapter 2: Technological Revolutions and Techno-Economic Paradigms

Carlota Perez

Subjects: economics and finance, economics of innovation, evolutionary economics, innovation and technology, economics of innovation, technology and ict


9 Figure 2.1 The double nature of technological revolutions NEW INTERRELATED GENERIC TECHNOLOGIES AND ORGANIZATIONAL PRINCIPLES capable of rejuvenating and upgrading mature industries A CLUSTER OF NEW DYNAMIC PRODUCTS, TECHNOLOGIES INDUSTRIES AND INFRASTRUCTURES. generating explosive growth and structural change A CHANGE OF TECHNO-ECONOMIC PARADIGM New engines of growth for a long-term upsurge of development A higher level of potential productivity for the whole productive system Source: Based on Perez (1998) p. 68 the Kuhnian sense,8 because it defines the model and the territory for ‘normal’ innovative practice, promising success to those that follow the principles incarnate in the core industries of the revolution. Each technological revolution, then, is an explosion of new products, industries and infrastructures that gradually gives rise to a new techno-economic paradigm, which guides entrepreneurs, managers, innovators, investors and consumers, both in their individual decisions and in their interactions, for the whole period of propagation of that set of technologies. A. Five Technological Revolutions in Two Hundred Years At several moments in his thinking about development, Simon Kuznets explored the notion of epochal innovations as those capable of inducing significant changes in the direction of growth. In his Nobel lecture in 1971, he stated: The major breakthroughs in the advance of human knowledge, those that constituted the dominant sources of sustained growth over long periods and spread to a substantial part of the world, may be termed epochal innovations. And the changing course of economic history can perhaps be subdivided into economic epochs, each identified by...

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