Capacities, Processes, and Feedbacks: The Complex Dynamics of Development

The theory of complex systems applied to the evolutionary economics allows innovation to be considered not only the result of the intentional action of individual agent, but as an endogenous property of system dynamics. In this sense, innovation constitutes an emergent property of the system because it is not entirely determined on micro or macro levels, but is a result of continuous interaction between the two. At micro level the paper assumes that economic agents are endowed with intentionality in their adaptive or creative reactions that explains specific patterns of capacities and connectivity development. At macro level, processes of creative destruction, appropriation and structural change describe the evolution of the whole system. These dynamics tend to consolidate institutional frameworks that could be adverse or beneficial to innovation and that would reinforce divergent development paths. The feedbacks between micro and macro levels explain why the initial differences in development levels tend to increase between developed and developing countries.