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The aim of this inquiry is to deepen our understanding of the interactions between knowledge, technologies and institutions in socio-economic process by considering the affinities and divergences of Original Institutional Economics (OIE) and neo-Schumpeterian economics (NSE). Both strands of evolutionary economic thought recognize the importance of knowledge for human progress and the role of institutions in molding this process. OIE and NSE share a common perspective in what concerns (i) the role of knowledge for socio-economic change, (ii) the behavioral dimension of technology molded by institutions, and (iii) the role of purposeful evaluation in processes of institutional and technological change. Considering these commonalities, both strands of thinking could benefit from “joining forces”. Firstly, the conceptualization of how knowledge and technologies drive human progress from a neo-Schumpeterian perspective could very much benefit from the consideration of the value system and the power structure sustaining it as put forward by OIE. Values and power appear as key determinants channeling (or retaining) knowledge towards human progress. Moreover, the role of the value system as suggested by OIE could be operationalized and further developed to explain paths of socio-economic development drawing on the conceptualization of “selection mechanisms” as put forward by neo-Schumpeterian models.
The initial opening of China and India coupled with the opening of the former socialist countries in the 1990s led to the integration of 40% of the global labour force into the world economy, causing large-scale effects regarding market integration, catching up, and income distribution. This trend has been defined as ‘Shifting wealth I’ (OECD, 2010, OECD, 2015). However, today, there is some uncertainty as to whether this process will continue, i.e. whether emerging economies will continue their process of technological upgrading and move from efficiency to innovation-driven growth. Whether we will observe ‘Shifting Wealth II’ or the further growth of emerging economies will ultimately depend on whether the productivity growth of emerging economies will be associated with further upgrades in technology. In addition, technology upgrading was, until recently at least, to some extent positively connected with the prevailing liberalized trade regime. Currently there are political developments around the world which represent a threat to the established trade system by way of increasing national protectionism which might impact future upgrading in one way or the other.