Overview

The creation of a positive feedback loop is what makes the difference between sustained growth and gradual (or sudden) decline. A Positive Feedback Loop Innovation System (POLIS) is here modelled along Schumpeterian lines and applied to the actual economy of Taiwan.

This paper offers a new perspective on the productivity debate in East Asia by going much beyond the standard production function approach. In fact, a POLIS model offers a viable alternative to standard growth accounting approach to assess the presence and impact of technical change.

Innovation in specific firms or groups of firms can have macroeconomic effect. The growth rate of GDP is shown to be possibly connected, among other things, on the amount of R&D, through a relationship that is both intimate and complex.

Non-linear production structures with increasing return to scale and endogenous innovations can exhibit very interesting evolution over time.

Impressive empirical evidence is found, in particular, in the modular organizational architecture of some of the high technology firms in Hsinchu science-based industrial parks.

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