Innovation, Structural Change and Multisectoral Economic Growth

In this work, we draw upon the Neo-Schumpeterian concept of sectoral systems of innovation to reflect on the uneven sectoral patterns of productivity growth observed in modern economies. Inspired by recent contributions within evolutionary economic theory, we present a formal proposal to integrate uneven sectoral productivity growth in a multisectoral growth model. In this model, certain demand-side elements turn out to be crucial. More precisely, we explore the interactions between technological factors, income growth, and distinct income elasticities of sectoral demand underlying structural change. Thereby, we obtain a representation of economic growth as a long-run property which emerges from complex interactions between sectoral innovation, and certain (often-overlooked) demand-side fundamentals.