Innovation and Production Dynamics: the Producibility-Scarcity Paradox

This paper argues that modern economic growth as industrialism guided by technical invention leads to the formation of an industrial structure characterized by significant features of circularity. This circularity can be at the origin of dynamic processes that are generated within the structure of the industrial system and are largely independent of final consumer demand. Industrialism guided by technical invention (modern economic growth) has featured both improvements in the effectiveness of the transformation of raw materials into final consumer goods and the development of intermediate productions leading to the formation of a relatively self-contained and circular set of industrial activities.This feature of an industrial economy explains the greater likelihood and resilience of successful innovation in economies characterized by the existence of well-developed infrastructural and technological platforms providing a relatively stable environment to innovative initiatives.This feature also highlights the possibility of reducing technological uncertainty by explicitly considering the inertia inherent to technological interrelatedness across the different units of the production system.