Sector size, technical change and stability in the USA (1957-2006): a Schumpeterian approach

The main purpose of this paper is to investigate two famous postulates of the Schumpeter hypothesis and its implications for the U.S. economy. Analytically, we investigate whether sector size matters for sectoral (i) technological change and (ii) stability, as expressed through the relevant quantitative measures and variables. To this end, we test a number of relevant models that express the various forms of this relationship. More precisely, we use panel data for the fourteen main sectors of economic activity in the U.S.A. over the period 1957-2006, just before the first signs of the US and global recession made their appearance. The results seem to be in line with the Schumpeterian postulate that market size matters for technological change and economic stability, for the US economy (1957-2006). Clearly, further research would be of great interest.