The Fund-Flow Approach: A Critical Survey

43 Pages Posted: 10 Nov 2009 Last revised: 19 Nov 2010

See all articles by Giuseppe Vittucci Marzetti

Giuseppe Vittucci Marzetti

University of Milano-Bicocca - Department of Sociology and Social Research

Date Written: November 10, 2009


The fund-flow approach to production theory was first proposed by Nicholas Georgescu-Roegen almost half a century ago. Since then, from time to time it has received attention, but, probably because of its analytical complexity and difficulty to deliver sound operational conclusions, it is now almost abandoned. The approach has been also recently criticized for its instrumental assumption of constant efficiency of funds, by emphasizing its limitations in addressing issues related to fixed capital depreciation.

The paper critically surveys Georgescu-Roegen’s original model, together with the later developments and modifications. It also discusses the recent criticisms. The conclusion is that, despite its drawbacks, the fund-flow approach has a “competitive advantage” in the actual description of production as a process unfolding in time and entailing a temporal coordination between different elements. In this respect, it seems that most of its fruitful applications have yet to come.

Keywords: Fund-flow model, Georgescu-Roegen, Production theory, Returns to scale, Technical coefficients

JEL Classification: B29, B59, C67, D24, L23, O33

Suggested Citation

Vittucci Marzetti, Giuseppe, The Fund-Flow Approach: A Critical Survey (November 10, 2009). Available at SSRN: or

Giuseppe Vittucci Marzetti (Contact Author)

University of Milano-Bicocca - Department of Sociology and Social Research ( email )

via Bicocca degli Arcimboldi, 8
Milano, MI 20126

HOME PAGE: http://

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics