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From necessities to imaginary worlds: Structural change, product quality and economic development

Author

Listed:
  • Pier Paolo Saviotti

    (GAEL - Laboratoire d'Economie Appliquée = Grenoble Applied Economics Laboratory - UPMF - Université Pierre Mendès France - Grenoble 2 - INRA - Institut National de la Recherche Agronomique)

  • Andreas Pyka
Abstract
In this paper we explore how innovation and structural change affected economic development in the long run, by which we mean a period such as the one between the industrial revolution and the present. We separate the period since the industrial revolution into two sub periods, which we call 'necessities' and 'imaginary worlds' and focus on three trajectories, increasing productive efficiency, increasing output variety, and increasing output quality and differentiation. In the paper we show how a combination of the three trajectories gave rise to the transition between 'necessities' and 'imaginary worlds' and propose a mechanism of economic development which could have given rise to the type of economic system which we can observe today. To create growing output quality and differentiation higher competencies were required. These higher competencies required higher levels of education and demanded higher wages, which contributed to raise consumers' purchasing power. These phenomena, combined with the income effect of the creation of new sectors, generated the disposable income with which consumers could purchase the new, higher quality, non necessities, goods and services generated by innovation. In the paper we study the impact of several model parameters on the stability of the virtuous circle previously described.

Suggested Citation

  • Pier Paolo Saviotti & Andreas Pyka, 2013. "From necessities to imaginary worlds: Structural change, product quality and economic development," Post-Print hal-01064107, HAL.
    • Handle: RePEc:hal:journl:hal-01064107
    DOI: 10.1016/j.techfore.2013.05.002
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    3. Seung Hwan Kim & Jeong hwan Jeon & Anwar Aridi & Bogang Jun, 2022. "Factors that affect the technological transition of firms toward the industry 4.0 technologies," Papers 2209.02239, arXiv.org.
    4. Carlos Bianchi & Fernando Isabella & Santiago Picasso, 2023. "Growth slowdowns at middle income levels: Identifying mechanisms of external constraints," Metroeconomica, Wiley Blackwell, vol. 74(2), pages 288-305, May.
    5. Saviotti, Pier Paolo & Pyka, Andreas & Jun, Bogang, 2016. "Education, structural change and economic development," Structural Change and Economic Dynamics, Elsevier, vol. 38(C), pages 55-68.
    6. Heinrich, Torsten, 2015. "Growth Cycles, Network Effects, and Intersectoral Dependence: An Agent-Based Model and Simulation Analysis," MPRA Paper 79575, University Library of Munich, Germany, revised 08 Jun 2017.
    7. Pier-Paolo Saviotti & Andreas Pyka, 2017. "Innovation, structural change and demand evolution: does demand saturate?," Journal of Evolutionary Economics, Springer, vol. 27(2), pages 337-358, April.
    8. Pier-Paolo Saviotti & Andreas Pyka¤ & Bogang Jun, 2020. "Diversification, structural change, and economic development," Journal of Evolutionary Economics, Springer, vol. 30(5), pages 1301-1335, November.
    9. Heinrich, Torsten, 2016. "The Narrow and the Broad Approach to Evolutionary Modeling in Economics," MPRA Paper 75797, University Library of Munich, Germany.
    10. Teixeira, Aurora A.C. & Queirós, Anabela S.S., 2016. "Economic growth, human capital and structural change: A dynamic panel data analysis," Research Policy, Elsevier, vol. 45(8), pages 1636-1648.
    11. Matthess, Marcel & Kunkel, Stefanie, 2020. "Structural change and digitalization in developing countries: Conceptually linking the two transformations," Technology in Society, Elsevier, vol. 63(C).
    12. Julien Chicot & Mireille Matt, 2015. "Public procurement of innovation: A review of rationales, instruments and design," Post-Print hal-02087762, HAL.
    13. Costa, Naijela Silveira da & Ferraz, Diogo & Moralles, Herick Fernando & Nascimento, Daisy do, 2022. "Economic complexity and human development: comparing standard and slack-based data envelopment analysis models," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    14. Roberto Camagni & Roberta Capello & Giovanni Perucca, 2022. "Beyond productivity slowdown: Quality, pricing and resource reallocation in regional competitiveness," Papers in Regional Science, Wiley Blackwell, vol. 101(6), pages 1307-1330, December.
    15. Torsten Heinrich & Jangho Yang & Shuanping Dai, 2020. "Levels of structural change: An analysis of China's development push 1998-2014," Papers 2005.01882, arXiv.org, revised Sep 2020.
    16. Torsten Heinrich & Jangho Yang & Shuanping Dai, 2022. "Levels of structural change," Journal of Evolutionary Economics, Springer, vol. 32(1), pages 35-86, January.
    17. Xiaoye Liu & Kedong Yin & Yun Cao, 2021. "Contribution of the Optimization of Financial Structure to the Real Economy: Evidence from China’s Financial System Using TVP-VAR Model," Mathematics, MDPI, vol. 9(18), pages 1-21, September.
    18. Ferraz, Diogo & Silveira, Naijela J. C. & Herick Fernando Moralles & do Nascimento Rebelatto, Daisy Aparecida & Pyka, Andreas, 2017. "An Efficiency Analysis Of Economic Complexity And Human Development In 2013," EconStor Conference Papers 171455, ZBW - Leibniz Information Centre for Economics.
    19. Emilie Le Caous & Fenghueih Huarng, 2020. "Economic Complexity and the Mediating Effects of Income Inequality: Reaching Sustainable Development in Developing Countries," Sustainability, MDPI, vol. 12(5), pages 1-26, March.
    20. Ferraz, Diogo & Moralles, Hérick Fernando & Suarez Campoli, Jéssica & Ribeiro de Oliveira, Fabíola Cristina & do Nascimento Rebelatto, Daisy Aparecida, 2018. "Economic Complexity and Human Development: DEA performance measurement in Asia and Latin America," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 25(4), pages 839-853.

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