Economic Development by the Creation of New Sectors

The role played by qualitative change in economic development is examined and a model is proposed in which changes in the composition of the economic system are generated by the evolution of the system itself.This model of economic development is driven by the creation of new industrial sectors. The dynamics of the emergence of new sectors depend not only on the creation of new knowledge and innovations, but also on new venues/niches emerging within sectors that, although once new, have become saturated. The intensity of competition in one sector, determined by the entry of imitators, facilitates the creation of a niche that can potentially become a new sector.The results of this model reveal that firms try to reduce the intensity of competition to which they are subject. Firm behavior can be ambiguous; on one hand, firms avoid competition by looking for temporary monopolies, on the other hand, firms imitate successful innovators by entering market niches and sectors thus raising the level of competition. The behavior of the model is described by the dynamics of variables such as: 1) number of firms; 2) maximum demand; 3) demand and intensity of competition; 4) adjustment gap; and 5) mergers and acquisitions.A dynamic model of growth involving qualitative change is presented, in which the aggregate output of the sector can be calculated by means of the outputs of individual units (firms or sectors).It is recommended that other sectors use a model of demand to help foresee the relative values of the maximum demand for different sectors.(CBS)