Introduction

Carlota Perez (1983, 2002, and with Freeman 1988) has been in the vanguard of a small group of economists and other social scientists who have been arguing that the driving force behind the economic development that has taken place over the last two centuries has been the co-evolution of technologies and institutions. I use the term ‘development’ here rather than ‘growth’ to connote that, under this view, an essential feature of the process has been the rise over time of new technologies, institutions, and industries, and the decline or radical reshaping of others, and to think of the economic progress as simply being able to produce more, and using aggregate statistics like GNP or GNP per worker as an indicator of what has happened, is to miss the heart of the story.

As we know, the latter perspective is a hallmark of the neoclassical economic growth theory that grew up in the 1950s and remains the basic story about economic growth taught in mainline economics departments. From its genesis, neoclassical growth theory has recognized technological advance as a key driving force. However, even its modern versions do not come to grips with the processes by which technology advances, as these have been documented by empirical scholarship, and while a few recent models do incorporate a characterization of ‘creative destruction’, that characterization is not just highly stylized, but, from the point of view of Perez and her colleagues, misses most of the action.