Technology, Knowledge and the Firm
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Technology, Knowledge and the Firm

Implications for Strategy and Industrial Change

Edited by Ken Green, Marcela Miozzo and Paul Dewick

There is a long-standing tradition of research that highlights the importance of differences in the organizational and technological capabilities of firms and their effect on economic performance. This book expands on this theme by exploring the role of knowledge and innovation in firm strategy and industrial change. Underlying the volume is the belief that firms have distinctive methods of operation and that these processes have a strong element of continuity.
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Chapter 10: Making (Kondratiev) Waves: Simulating Long-Run Technical Change for an Integrated Assessment System

Jonathan A. Köhler


1 Jonathan A. Köhler 1. INTRODUCTION A world macroeconomic model is being developed to investigate policies for climate change and sustainable development. To analyse climate change policy, a timescale of 100 years is necessary, because changes in CO2 concentrations, which are now strongly influencing the atmosphere, become significant over a time period of 50–100 years or more. This raises particular difficulties for economic modelling. Looking back over the last 200 years, the socioeconomic system seems to be characterized by ongoing fundamental change, rather than convergence to an equilibrium state. Our opinion is that over such a long time period, a neoclassical economic model incorporating a long-term equilibrium for the world economy is inappropriate. It is necessary instead to consider the dynamic processes of socioeconomic development. These processes have been called ‘Kondratiev waves’ in the literature on long-term economic development (Freeman and Louçã, 2001). This chapter suggests a quantitative theory of long-term technical change. It will be part of a global macroeconometric model. Dewick et al. (2004) describe the process of assessing the future technologies to which this theory will be applied. In Section 2, the case is made for a disequilibrium analysis, in the spirit of the evolutionary economists. In Section 3, a (descriptive) theory of long-term economic change is discussed and an interpretation suitable for incorporation in a macroeconomic modelling framework introduced. A simple model of a growth sector is introduced in Section 4 and some preliminary results are given in Section 5. Section...

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