  This paper is based on the premise that economic growth is driven by an
interplay between innovation and imitation in an economy composed of
interacting firms operating in a stochastic environment. A novel approach to
modeling imitation is presented, based on range-dependent processes that
describe how firms consider proximity when imitating peers who are found in a
given neighborhood in terms of productivity. Using a particularly tractable
approach, we are able to analyze how drastically different economic growth
scenarios emerge from different imitation strategies. These emerging scenarios
range from diffusive growth where the variance of productivity grows
indefinitely, to balanced growth described by a traveling wave with fixed
variance. The latter scenario is sustained only when imitation strength among
firms exceeds a critical bifurcation threshold.
