Capacities, Processes, and Feedbacks: The Complex Dynamics of Development

Abstract

The theory of complex systems applied to the evolutionary economics

allows innovation to be considered not only the result of the

intentional action of individual agent, but as an endogenous property

of system dynamics. In this sense, innovation constitutes an

emergent property of the system because it is not entirely determined

on micro or macro levels, but is a result of continuous

interaction between the two. At micro level the paper assumes that

economic agents are endowed with intentionality in their adaptive

or creative reactions that explains specific patterns of capacities

and connectivity development. At macro level, processes of creative

destruction, appropriation and structural change describe the evolution

of the whole system. These dynamics tend to consolidate

institutional frameworks that could be adverse or beneficial to innovation

and that would reinforce divergent development paths. The

feedbacks between micro and macro levels explain why the initial

differences in development levels tend to increase between developed

and developing countries.