Resources, Producibility and Economic Dynamics: A Framework

The aim of this paper is to present a comprehensive assessment of the structural economic analysis of non-produced and appropriable resources from the point of view of long-term dynamics and within a multi-sectoral, political economy framework. The multi-sectoral approach to production and structural change suggests a distinctive approach to the treatment of non producible resources. It also entails an approach to dynamic economic analysis that is distinctly different from the approach followed in the greatest part of the multisectoral modelling literature (as discussed, for instance, in Leontief, 1941, 1951; Pasinetti, 1965, 1977, 1981).This is due to the central role assigned to a multisectoral, resource-constrained economy, in which inter-sectoral relationships are characterized by complementarity or limited substitutability. In this economy, material bottlenecks and technological linkages are central factors explaining the course of economic dynamics and the structural transformations associated with it. The utilization of non-produced resources under technological or organizational complementarity (or limited substitutability) brings about the possibility of decreasing returns as the economic system hits scarcities of different types. In particular, the resource-based theory of structural dynamics highlights the conditions under which decreasing returns of the intensive or extensive type may occur. In either case, the production structure of the economic system consists of a set of interdependent processes in which processes using non-produced resources make use of different ‘types’ of the same resource, or of different techniques with the same resource type. It is argued that decreasing returns lead to the successive activation of inferior techniques, and thus to the utilization of a global technology at any given time (say, multiple qualities of mineral ore, multiple types of agricultural land, etc.). Similarly, increasing returns are associated with the activation of combined technologies allowing a better utilization of the complementarities between those very techniques. In either case, paths of uneven dynamics of a purely structural character are generated. Four features of those paths are especially important: 1. complementarities and bottlenecks work underneath the surface of markets and become primarily visible in the long run; 2. technological interrelatedness is central in generating patterns of uneven evolution and structural change; 3. alternative time horizons may be associated with different criteria for the ranking of the technical opportunities available at any given time. (so that alternative paths of structural change may be highlighted depending on which time horizon is adopted); 4. technological distribution (with the formation of structural rents) becomes visible independently of the functional, social and personal distributions of income. This type of distribution may affect the choice of techniques and be in turn affected by the course of structural dynamics