Abstract

The paper begins by stating the author's views on the meaning of "capabilities", which build upon Sen's notion of consumer capabilities, here reinterpreted as producer capabilities, and extended to the cases of interactive and dynamic capabilities through incorporating learning based on external sources together with changes through time. In this respect, long-term increasing returns permit the inclusion of "capability lifecycles" in the analysis. Even more importantly they allow for interchanges between trends and cycles in capabilities and those in "competencies". Competencies are defined here according to some 16 criteria that differentiate them from capabilities. Consideration of the rise of technological capabilities over periods of expansion in catching-up countries suggests patterns of two-way leads and lags between competency acquisition and capability accumulation, in place of an "either/or" viewpoint. Implications include the limitations on human capital models of growth, which - inasmuch as these depict competency acquisition alone - undervalue the effort and commitment required via accompanying capability formation to bring about the desired growth outcomes. While both are required for sustained growth, the distinctions between the concepts highlight the interdependencies involved.