Time to build and out-of-equilibrium growth process

This paper proposes an analytical approach to growth modelling that focuses on the temporal and hence the organizational dimension of real production processes, rather than making use of a production function, which is a pure technical relationship. This approach takes advantage of the breakthroughs in economic theory by Georgescu-Roegen and Hicks. The step-by-step analysis of production in time proposed by Georgescu-Roegen has brought into light the idleness of capital equipment and of human resources as the main obstacle to growth, and given a robust basis to Smith's growth theory according to which the articulation between the division of labor and the extent of market is the main engine of growth. The analysis of the time dimension of production processes proposed by Hicks that focuses on the distinction between construction and utilization phases has opened the way for a comprehensive analysis of the type of disturbances – unemployment and productivity slowdown – which arise along an out-of-equilibrium growth path. These contributions provide the basis for the analysis of qualitative change as a learning process, whose evolution is not predetermined but depends on what happens along the way, that is, on the recurrent distortions in the structure of productive capacity due to co-ordination failures.

► We propose a growth modelling that focuses on the temporal and the organizational dimension of real production processes. ► We take advantage of economic theory that provides the basis for the analysis of qualitative change as a learning process. ► We analyze unemployment and productivity slowdown, which arise along an out-of-equilibrium growth path. ► We show that evolution depends on the recurrent distortions in the structure of productive capacity due to co-ordination failures.