Evolutionary Micro-dynamics and ChangesIn the Economic Structure

The paper aims to account for the empirical stylised facts re-lated to changes in sectoral structures that have led to the growthof services in most advanced countries over recent decades. A growthmodel with evolutionary micro{founded structural change is devel-oped, which formalises the role of technical change and changes in in-termediate demand as they aect the evolution of the sectoral compo-sition of the economy and macro-economic growth. Firstly, we providea micro{foundation for the Kaldorian Cumulative Causation mecha-nism. Secondly, we account for (demand{related) macro-constraintsaecting the micro-behaviour of rms in the decision to adopt tech-nology. We also formalise the mechanisms transmitting the eects ofmicro-behaviour on aggregate growth, via changes in the intermediatelinkages and sectoral composition of the economy. The simulated re-sults are based on the use of the actual data, including Input{Output(I{O) coecients in the case of Germany. Three scenarios are identi-ed, which account for the eects of a set of key parameters on changesin the structure of the economy...