No 2009/6 Technological Waves and Economic Growth

Sweden in an International Perspective 1850-2005

Abstract

This paper presents a model of long waves and an empirical analysis of Swedish growth since 1850. The model emphasises the creation of new complementarities around macro innovations. The growth process is periodised in two main parts. The first period is characterised by transformation when development is uneven and unbalanced. The second period is characterised by rationalisation when the economy is made more homogenous with growth accelerating in a wider context. With a Swedish Schumpeterian concept the complementarities around innovations form development blocks at the centre of the growth process. The process of innovation, diffusion and structural change is analysed. In periods of more rapid transformation, regions and nations react differently. Diffusion is more rapid to regions and nations favoured by new demands – due to their resource endowments, their institutional characteristics and their social capability. Over time however competencies, infrastructures and institutions will be more generally adapted to the new complementarities. Hence the development blocks will be more widely diffused. In that diffusion process, the favourable position of the leaders is undermined while laggards will improve their position. Diminishing returns will however shift profitability between established and emerging complementarities that pave the way for crisis and new structural transformation.