This book discusses and illustrates the emergent behavior produced due to cumulative pattern of interactions in a strongly interactive economy, reflecting the diversity of decisions taken by different economic agents. It takes a look at unexpected socioeconomic changes during the past millennium.

Originally published in 1985. Mathematical methods and models to facilitate the understanding of the processes of economic dynamics and prediction were refined considerably over the period before this book was written. The field had grown; and many of the techniques involved became extremely complicated. Areas of particular interest include optimal control, non-linear models, game-theoretic approaches, demand analysis and time-series forecasting. This book presents a critical appraisal of developments and identifies potentially productive new directions for research. It synthesises work from mathematics, statistics and economics and includes a thorough analysis of the relationship between system understanding and predictability.

I'Ve live in an astornshingly complex world, Yet what we do in our everyday lives seems simple enough. Most of us conform to society's rules, pursue familiar strategies, and achieve reasonably predictable outcomes. In our role as economic agents, we simply peddle our wares and earn our daily bread as best we can.So where on earth does this astonishing complexity come from? Much of it is ubiquitous in nature, to be sure, but part of it lies within and between us. Part of it comes from those games of interaction that humans play-games against nature, games against each other, games of competition, games of cooperation. In bygone eras, people simply hunted and gathered to come up with dinner. Today you can find theoretical economists scratching mysterious equations on whiteboards (not even blackboards) and getting paid to do this. In the modern economy, most of us make our living in a niche created for us by what others do. Because we've become more dependent on each other, our economy as a whole has become more strongly interactive.

6. 2 Basic Model Characteristics 185 6. 3 A Closed Model Approach to Interregional Estimation 189 7 Towards an Integrated System of Models for National and Regional Development 205 7. 1 Introduction 205 7. 2 In Search of a Framework for Integration 207 7. 3 National Development Scenarios 222 7. 4 The National-Regional Interlace 231 7. 5 Regional Development Scenarios 236 7. 6 Concluding Remarks 244 Appendixes 253 A Basic Microstate Descriptions 253 B Incomplete Prior Information: A Simple Example 257 C Computing Capital Coefficients and Turnpike Solutions: The DYNIO Package 259 D Minimizing Information Losses in Simple Aggregation: Two Test Problems 274 E Computing Interregional and Intersectoral Flows: 276 References 287 Index 305 vi LIST OF FIGURES 1. 1 A Three-Dimensional Guide to Later Chapters 12 2. 1 Historical Development of the Entropy Concept 32 2. 2 Selected Applications of Information Theory to Input-Output Analysis and Interaction Modelling 48 3. 1 The Bose-Einstein Analogy 58 5. 1 The Dog-Leg Input-Output Table 159 7. 1 A General Multilevel Social System 219 7. 2 The Hierarchical System of Models 219 7. 3 Choice of Production Techniques 230 7. 4 The National-Regional Interface 235 7. 5 A Sequential Compromise Procedure 243 7. 6 The Integrated Modelling System 246 vii LIST OF TABLES 3. 1 Production-Constrained Microstate Descriptions 59 3. 2 Production-Constrained Entropy Formulae 62 3. 3 Production-Constrained Solutions 65 3. 4 Doubly-Constrained Solutions 73 4. 1 The Static Input-Output Table 85 4.

In the global information society, innovation is a highly pervasive process that influences all facets of human life: cultural, economic, political, and institutional. A desire to comprehend the impacts of innovative change on so many areas of urban life prompted the research project that has resulted in the publication of this volume. Our research confirms that we are presently in the midst of an era of rapid and explosive change. The primary engine driving this latest transformation of the post-industrial society is generally thought to be technological. But such an explanation is too narrow. Broadly speaking, the age in which we find ourselves could be more aptly described as a global, knowledge-intensive age. Many of today's knowledge-intensive activities, like research and development (R&D) programs, are being conducted with relative ease on a multinational scale. As well as science having an increasing impact on processes of innovation, R&D activities also have become more complex. We can observe a growing sophistication of learning-by-doing among creative economic agents. This more sophisticated era of global knowledge exchange is facilitated by major advances in our infrastructure networks. In this highly interactive world, many innovations are by-products of collective exchanges between cities far apart, simplified by the ease of transport and communication. Thus, there is a need for us to look more closely at various collective sequences of learning, knowledge exchange and innovation in a spatial setting. This is the primary purpose of this book.

This volume contains a selection of papers presented at an international symposium on research and development, industrial change and economic policy organized and hosted by the University of Karlstad, Viinnland, Sweden. Situated about halfway between Stockholm and Oslo, Karlstad stands on the River Klara, which reaches north into the mountains of Norway. Founded by King Charles IX of Sweden, whose statue stands in the city centre beside the river, the city celebrated its 400th anniversary in 1984. For many decades the wealth of Karlstad has been based on traditional industries such as iron, timber and paper, and throughout the province of Viinnland there are a considerable number of industrial communities which grew up around mines, ironworks, sawmills and papermills. Even the cultural structure of these communities is heavily marked by the industrial environment in which they developed. However, for over a decade now a major structural reorientation has been taking place and the old industrial structures have been disappearing. For various reasons the importance of large scale, manufacturing companies has declined and as a result of intense development work with new ideas, new entrepreneurs and new technology, we have seen the rapid rise of small companies. In this context, recent research has shown that universities playing an increasingly central role in regional development. Thus the continued development of the University of Karlstad is of significant regional and national interest. Although fairly small in an international perspective (approximately 4000 students) the university is expanding rapidly.

Today, telecommunication systems are expanding and evolving at a remarkable rate, with the aid of fiber optics, satellites and comput erized switchboard systems. Airline systems are providing faster and more efficient networks for world-wide human transportation. Com puters are now generally accessible to virtually all industries and many households. But perhaps the most important factor is that education systems are expanding the knowledge base for city populations, thus resulting in increased efficiency in the use of computers, telecommuni cations and rapid transportation systems. The revolutionary age of logistical networks is upon lIS. Logistical networks are those systems which facilitate the movement of knowl edge, commodities, money, and people in association with thE; produc tion or consumption of goods and services. Logistical networks form a set of important infrastructure which serve as hard and soft means to sustain all kinds of movement, transactions and diffusion within and between global networks of cities. Major structural changes in the re gional and urban economy, culture and institutions are triggered by slow but steady changes in global logistical systems."

During the seventies and eighties, the industries associated with the transportation of goods and people have been exposed to some profound changes. The quickening pace of technological change - with its growing emphasis on telecommunications, knowledge-handling capacity, and air transportation - is increasing the discrete character of the world economy. Thus the network structure of global development patterns is becoming more important, with metropolitan centres as key nodes and rapid transportation routes as key links. In this evolutionary situation, changes in the preferred mix of transport modes are inevitable. The faster and more direct modes will be favoured, individually and in combination, and there will be an increasing interest in transportation policies and the provision of infrastructure. This volume contains a collection of innovative papers presented at the First International Conference on Transportation for the Future, held in Sodertalje, Sweden in July 1988. Twenty industry leaders and prominent scientists from Europe, USA and Japan present their views about the ongoing transformation of production and distribution systems among firms striving for Just-In-Time methods, economies of scope, and a fully integrated approach to their economic activities. The future of passenger travel and infrastructure are also discussed. The resulting book presents a surprisingly consistent picture of how the transportation industries of the industrialized nations may be expected to grow and change in a long-term perspective."

Few otherfacetsofsocial andeconomic life are sopoorly understood and yet so indisput- ablyvital for prosperous development as irifrastructure. Sincetheearly 1980sresearchers and policy makers in various OECD nations have started to readdress the issue ofinfra- structure investments. This renewed interest has been promptedby a varietyofconcerns. One observation was that such investments were declining from levels which mighthave been inadequate in the first place. A second observation was that the timing of these cutbacks in infrastructure spending seemed to roughly coincide with lower rates of growth in outputorproductivity. This raised the intriguing question ofwhetherthe latter might be attributable to the former. Coulditbe thatinfrastructureinvestmentscontrolan economy's rate of productivity growth? The response in many countries has been to initiate theirownresearch in an attempttoverify orrejectthis hypothesis. But the more welearn abouttheroleofinfrastructure anditsrelationships with therest of the economy, the more complicated it seems to be. Time itself is quite difficult to accommodate given the wide variety ofspeeds atwhich differentpartsofaneconomycan adjust. Because of this inherent complexity, we tend to break the problem down into "bite-sizedchunks", thereby enabling us toisolate the parts ofinterest to us - such as the impact of infrastructure on productivity. In this way we can ignore the complex inter- actions betweenour areaofinterest and the restofour world. By saying ceteris paribus, we overlook many otherkey infrastructuralimpacts like those on theenvironmentandon ouroverall qualityoflife. This distorts the true picture.

In the global information society, innovation is a highly pervasive process that influences all facets of human life: cultural, economic, political, and institutional. A desire to comprehend the impacts of innovative change on so many areas of urban life prompted the research project that has resulted in the publication of this volume. Our research confirms that we are presently in the midst of an era of rapid and explosive change. The primary engine driving this latest transformation of the post-industrial society is generally thought to be technological. But such an explanation is too narrow. Broadly speaking, the age in which we find ourselves could be more aptly described as a global, knowledge-intensive age. Many of today's knowledge-intensive activities, like research and development (R&D) programs, are being conducted with relative ease on a multinational scale. As well as science having an increasing impact on processes of innovation, R&D activities also have become more complex. We can observe a growing sophistication of learning-by-doing among creative economic agents. This more sophisticated era of global knowledge exchange is facilitated by major advances in our infrastructure networks. In this highly interactive world, many innovations are by-products of collective exchanges between cities far apart, simplified by the ease of transport and communication. Thus, there is a need for us to look more closely at various collective sequences of learning, knowledge exchange and innovation in a spatial setting. This is the primary purpose of this book.

Originally published in 1985. Mathematical methods and models to facilitate the understanding of the processes of economic dynamics and prediction were refined considerably over the period before this book was written. The field had grown; and many of the techniques involved became extremely complicated. Areas of particular interest include optimal control, non-linear models, game-theoretic approaches, demand analysis and time-series forecasting. This book presents a critical appraisal of developments and identifies potentially productive new directions for research. It synthesises work from mathematics, statistics and economics and includes a thorough analysis of the relationship between system understanding and predictability.

This book presents the latest information on both the theory and applications of networks, especially from the fields of transportation and communication, economics and human knowledge handling. It demonstrates that networks are of broad interest and that networks analysis from different disciplines offer unifying insight. Special attention is paid to networks in the ever increasing integration of Europe. Another point of focus is upon combinatorial aspects and the interactive effects between different networks, often known as synergetics.