The Dynamics of International Differentiation: A Multi-country Evolutionary Model

The paper presents some (admittedly preliminary) results on evolutionary modeling of open-economies interactions. The dynamics is microfounded in a multiplicity of boundedly rational agents who imperfectly learn how to innovate in environments characterized by notionally unlimited opportunities. Micro discoveries—it is shown—can generate persistent system-level effects. Despite the absence in the model of any institutional specificity of individual countries, processes of innovative exploration and imitation yield international divergence, (less often) convergence, catching-up, and falling-behind.