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specialisation
specialisation

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. learning refers to understanding through thinking ahead and solving backward, one of the main problem solving strategies. as ying (1967) pointed out, this learning process is used in dynamic programming. the process is also used in strategic planning and chess. doing refers to the capability of workers to improve their productivity by regularly repeating the same type of action. 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. robert lucas, jr. (1988) adopted the concept to explain increasing returns to embodied human capital. yang and borland (1991) have shown learning-by-doing plays a role in the evolution of countries to greater specialisation in production. 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.
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