Capabilities Accumulation and Development. What Histhory Tells the Theory

Development, catching up, and possibly forging ahead have to do with the technological, institutional, and policy dynamics associated with the great transformation—borrowing Karl Polanyi’s (1944) expression—leading from traditional, mostly rural economies to economies driven by industrial activities (and nowadays also advanced services), able to systematically learn how to implement and eventually how to generate new products and new ways of producing under conditions of dynamic increasing returns (Brandt and Rawski, 2008, use the same expression with reference to the Chinese miracle). Such a “great transformation” entails a major process of accumulation of knowledge and capabilities, at the levels of both individuals and organizations. Certainly, part of such capabilities builds on education and formally acquired skills (what in economists’ jargon often goes under the heading of “human capital”). However, at least equally as important, capabilities have to do with the problem-solving knowledge embodied in organizations—concerning, for example, production technologies, the technical and social division of labor, labor relations, and “dynamic capabilities” of search and learning (see, among others, Amsden 2001; Bell and Pavitt 1993; Chang 2002; Chang et al. 2002; Cimoli and Dosi 1995; Cimoli et al. 2009; Dosi et al. 1990; Mytelka 2007; Nelson 1982, 2004; Reinert 2007).