Institutions, technologies and increasing returns

Abstract

Institutions and technologies significantly affect economic development. Nevertheless, the genesis and evolution of institutions are often treated separately from technologies. This paper attempts to underscore the fact that institutions and technologies are connected with specific rules, moreover, they guide recurrent social interactions. It is assumed that analyzing institutions and technologies together may expose the rules associated with the process of information and knowledge spillover. The phenomenon of increasing returns is considered an important characteristic of current social and technological processes. Much attention has been paid to increasing returns and lock-in effects, since ineffective or suboptimal institutions are evolutionarily selected. Innovation activity is considered in the context of institutional-technological change under conditions of increasing returns. This approach enables us to focus on the means of choice of complementary institutional and organizational structures implemented by the government in the framework of its innovation policy. The effects of the implementation of new social technologies in the realms of innovation and education have been addressed in the context of shared social values and incentive structures.

Keywords

• institutions
• technologies
• increasing returns
• institutional environment
• innovations
• institutional economics