Long term economic development is characterized not only by increasing efficiency of economic activities but also by qualitative change within industries and increasing variety concerning the existence of different industries. Traditional economic growth models do not cope with the complex...

In order to explain long-run economic development, we analyse in this paper the interplay between supply-side and demand-side processes. On the supply side, three different innovation processes are observed and interact: (i) growing productive efficiency, (ii) the emergence of new sectors and...