Firms interactions and industrial development: a simulation model

This paper is part of a broader research that aims at understanding the industrial development (and innovation) processes in less developed countries, and the way in which their different paths affect growth and the capability to compete, focusing on local production (innovation) systems. In the present contribution we draw from this general framework and present a model of production process, with particular attention to the vertical relations among firms. The model represents heterogeneous firms (depicted as complex agents) producing multi-characteristic products. Firms operate in different sectors combining several inputs, possibly bought from firms in other sectors of the model. The results of the simulations suggest different patterns of industrial development related to different initial conditions.