Finance:Learning-by-doing (economics)
Learning-by-doing is a concept in economic theory by which productivity is achieved through practice, self-perfection and minor innovations. An example is a factory that increases output by learning how to use equipment better without adding workers or investing significant amounts of capital.
The concept of learning-by-doing has been used by Kenneth Arrow in his design of endogenous growth theory to explain effects of innovation and technical change.[1] Robert Lucas, Jr. adopted the concept to explain increasing returns to embodied human capital.[2] Xiaokai Yang and Jeff Borland have shown learning-by-doing plays a role in the evolution of countries to greater specialisation in production.[3] In both these cases, learning-by-doing and increasing returns provide an engine for long run growth.
Recently, it has become a popular explaining concept in the evolutionary economics and resource-based view (RBV) of the firm.[citation needed]
The Toyota Production System is known for Kaizen, that is explicitly built upon learning-by-doing effects.[citation needed]
See also
- Social:Experience curve effects – Express the relationship between experience producing a good and the efficiency of that production
- Learning curve – Relationship between proficiency and experience
References
- ↑ Arrow, Kenneth J. (1962). "The Economic Implications of Learning by Doing". The Review of Economic Studies 29 (3): 155–173. doi:10.2307/2295952. ISSN 0034-6527. https://www.jstor.org/stable/2295952.
- ↑ Lucas, Robert E. (1988). "On the mechanics of economic development". Journal of Monetary Economics 22 (1): 3–42. doi:10.1016/0304-3932(88)90168-7. ISSN 0304-3932. https://www.sciencedirect.com/science/article/pii/0304393288901687.
- ↑ Yang, Xiaokai; Borland, Jeff (1991). "A Microeconomic Mechanism for Economic Growth". Journal of Political Economy 99 (3): 460–482. ISSN 0022-3808. https://www.jstor.org/stable/2937738.
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