Diffusion of a new intermediate product in a simple 'classical-Schumpeterian' model

Area of Science:

• Economics
• Economic Theory
• Innovation Studies

Background:

• Circular production models where goods are inputs for other goods.
• The economic absorption process of new intermediate products.
• Structural transformation driven by innovation.

Purpose of the Study:

• To analyze the economic impact of new intermediate products.
• To examine structural transformation within a circular production model.
• To investigate Schumpeterian concepts of technological unemployment and forced saving.

Main Methods:

• Long-period analysis to study structural transformation forces.
• Examination of the shift of production means towards innovation.
• Analysis of differential growth mechanisms and alternative production systems.

Main Results:

• New intermediate products drive significant structural economic transformation.
• Technological unemployment is a potential outcome of innovation adoption.
• Forced saving and reduced per capita consumption can arise from this transformation process.

Conclusions:

• The introduction of new intermediate products fundamentally alters economic structures.
• Innovation-driven transformation carries risks of job displacement and reduced living standards.
• Understanding these by-products is crucial for managing economic change.