Production Process and Technical Change

The effects of introducing new techniques – especially those involving the application of microelectronics to production processes in market economies – are of increasing interest. During the last twenty years the development of different lines of research has considerably broadened our knowledge of the determinants and effects of technical change, considered as a variation in the method of production and/or in the quality of goods produced. In particular, recent research in innovation has been along the following lines: (a) the nature, sources and procedures of innovative activity; (b) the relationship between technical change and economic growth; (c) the relationship between technical change and market structure; (d) the relationship between innovation, industrial structure, economic development, and international trade; (e) the evolutionary theories of the firm and the theory of transaction costs; (f) the diffusion of new techniques.

There is an increasing need for a representation of the production process, which may be consistent with some of the recent advances, mentioned above, and in particular with studies on the nature of technical change, firms and markets. In the preceding pages the close links between analysing the production process and the nature of technical change have been stressed. In fact, without a model capable of considering all the main economic production dimensions, a detailed analysis of the nature of technical change appears to be a simple taxonomy. This lack of an appropriate representation of production processes may lead to a dichotomy between the analysis of the nature of technical change and the characteristics of these processes.