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November 2006
Historically, one of the most striking characteristics of the general process of capitalist development is the phenomenon of uneven development, defined as persistent differences in levels and rates of economic development between different sectors of the economy. However, much of existing economic theory predicts that many of the observed features of differentiation would tend to wash out as a result of competitive market forces. This paper seeks to bridge this gap. It proposes a strategy for the analysis of uneven development that advances toward a historically and empirically relevant theory. The starting point is a conception of the firm as an expansionary unit of capital with a complex organization, existing within an ordered system of firms that constitute the global economy. The process of industry evolution that takes place in this setting manifests features of persistent differentiation arising from internal changes in the firm, interactions among firms and with the social environment, as the system as a whole undergoes development driven by the firms� competitive activities of investment and technological innovation. The analysis draws in part on elements of the emerging paradigm of neo-Schumpeterian evolutionary theory and on some documented empirical regularities.