Handbook on the Economic Complexity of Technological Change
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Handbook on the Economic Complexity of Technological Change

Edited by Cristiano Antonelli

This comprehensive and innovative Handbook applies the tools of the economics of complexity to analyse the causes and effects of technological and structural change. It grafts the intuitions of the economics of complexity into the tradition of analysis based upon the Schumpeterian and Marshallian legacies.
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Chapter 19: Network Models of Innovation Process and Policy Implications

Paul Ormerod, Bridget Rosewell and Greg Wiltshire


* Paul Ormerod, Bridget Rosewell and Greg Wiltshire 1. INTRODUCTION Understanding the innovation process is key to understanding how capitalism has created levels of productivity which were previously undreamed of. However, the standard models of the firm or of macroeconomic growth do not address this very effectively. This is largely because innovation is fundamentally a disequilibrium phenomenon – it is about the constant adjustment towards a new equilibrium that is never reached because further innovation is always occurring. Innovation is a disturber and a re-adjuster, to both the firm and the economy. Since innovation is a dynamic process, analysis using comparative statics fails to capture the nature of the process. Schumpeter pointed out long ago that ‘innovation .  .  . does not lend itself to description in terms of a theory of equilibrium’ (Schumpeter, 1928), and more recently Antonelli notes that ‘innovation is the distinctive element of a dynamic process which cannot be analysed with the equilibrium approach’ (Antonelli, 2008). This chapter addresses the dynamics of innovation by considering the process by which a particular innovation might be made effective. To do this, we look at the networks by which organizations might discover and adopt innovations. Glückler notes that growth and innovation largely result from network dynamics, and this is the starting point this study takes (Glückler, 2007). Innovation is the deliverable realization of an invention. It is important not to treat technological improvement or invention as identical to innovation (Metcalfe, 2007). Metcalfe notes that even were technological advancement to end today, there...

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