ABSTRACT
This chapter presents the micro foundations of economic growth and the role of technical progress. It describes a non-equilibrium, evolutionary, approach to the issues, based upon the behavioural theory of the firm and a dynamic theory of competition. These principles are embodied in a microeconomic based computer simulation model, which is used to describe the technological and industrial development of an economy. The chapter describes a model which simulates evolutionary growth in a multisectoral economy. The main building block of an evolutionary model of economic growth is 'behavioural' theory of the firm. Two types of price are used; firm's and market prices. These are adjusted by the marketing board according to firms' prices relative to market price. The firm then meets its demand from current output with any difference met by an adjustment of stocks. An industry is characterised by three variables: market price; the total demand for its products; and the vector of market shares for the constituent firms.
