Theory and Empirics of Capability Accumulation: Implications for Macroeconomic Modelling

The accumulation of new technological capabilities is of high empirical relevance, both for the development of countries and the business success of firms. This paper aims to delineate strategies for the consideration of processes of capability accumulation in comprehensive macroeconomic models. It comprises a methodological discussion about the preconditions for macroeconomic models to consider insights from the applied business literature, as well as an extensive review of the literature specialized on capability accumulation on the firm and aggregated level. In doing so, it summarizes evidence on various determinants and mechanisms of capability accumulation and aligns them with the current representation of capability accumulation in macroeconomic models. Based on these results, it offers some suggestions on how macroeconomists may integrate these determinants derived from the specialized literature into their models.