National specificities in development and economic policy

1
National specificities in development and
economic policy

• ESST Module 4 Unit 4
• Andreas Reinstaller

2
Shedding light on our ignorance some core
findings of the last lectures

• Technical change
• Temporarily increasing returns underlie economic
  growth
• Technological change and innovation are main
  determinants of productivity growth
• Technology diffusion crucially affects economic
  growth
• Technical change and productivity gains are
  accompanied by
• Changes in skill requirements (human capital)
• Organisational change (changes of routines and
  heuristics technological regimes)

• Innovation
• Innovation depends on scientific progress
• Firms are important actors, but do not act alone
• Innovation requires more than RD
• Innovation is a creative and interactive process
  involving market and non-market institutions
• Competitive markets are necessary but not
  sufficient condition for innovativeness
• Network externalities, dynamics economies of
  scale are key sources of increasing returns
• Misleading perceptions of the state of the world
  (by firms) leads to the process of creative
  destruction industrial dynamics

3
How is knowledge produced the linear model of
Science Technology Innovation (STI)
Science (basic and applied), research and
development (knowledge production)
Schools, universities, vocational
education (knowledge mediation)
Production of commodities (knowledge application)
4
Example of a linear model How Research is viewed
in the Endogenous Growth Model by Aghion and
Howitt (1992)
Implication No feedback loop technical change
is a linear development. Society plays only
insofar a role as provides the means for
investment. every new design/innovation is used
and contributes to growth.
5
The generation of new knowledge as social
construction evolutionary reasoning
Research and Development
Knowledge, learning by doing
Potential markets
Sales and Marketing
redesign and production
invention /design
Boundary spanning conditions
From Kline, S. J. and Rosenberg, N. (1986), An
Overview on Innovation, in Landau, R. and
Rosenberg, N. (eds), The Positive Sum Strategy,
National Academy Press Washington DC, pp.
275-306
6
The meso-level firm networks and clusters

• Most important types of firm networks
• Supplier networks
• Marketing networks
• RD Networks

7
The effects of networking
8
Why? Network topology and diffusion of information

• Small world networks increase diffusion speed of
  knowledge and while keeping the own (research)
  group homogeneous (i.e. cliquish).
• New knowledge is brought into the group from
  outside, thus increasing the variety
• Group remains homogeneous so that intense
  interaction variety speed up integration of new
  knowledge into the research group

Graphics taken from R.Cowan and N.Jonard (2000),
MERIT Research Memorandum RM2000-018
9
Network characteristics cliques

• Cliques core networks with high direct and
  indirect interaction (thus knowledge flows) of
  path-length n (multiplicity) - in this case
  between firms

10
The macro-level National innovation systems (i)

• a set of distinctive institutions which jointly
  and individually contribute to the development
  and diffusion of new technologies and which
  provide the framework within which governments
  form and implement policies to influence the
  innovation process. As such it is a system of
  interconnected institutions to create, store and
  transfer the knowledge, skills and artefacts
  which define new technologies, J.S. Metcalfe
  (1995), The foundations of Technology Policy
  Equilibrium and Evolutionary perspectives, in
  P. Stoneman, Handbook of the Economics of
  Innovation and Technical Change, Blackwell,
  London (emphasis added)

11
National Innovation Systems II
12
The linkage structure of NISs

• An NIS consists of institutions,
• that formulate policy goals and co-ordinate
  (govt. agencies)
• that finance and fund R D (science funds,
  special loan programmes, etc)
• that act as bridge between decision making and
  fund redistribution research councils and
  associations
• that are responsible for knowledge creation
  private RD labs, universities
• That forster diffusion technology transfer and
  diffusion, promotion of technology-based firms,
  human resource mobility

• Facts
• The degree of complexity of modern technology
  requires a) specialisiation AND b)
  cross-disciplinary cooperation
• Technology becomes more science based (science
  based patents increased from 17000 in 1987 to
  gt50000 1994)
• Labour is the most powerful transmission
  mechanism of tacit knowledge
• Policy instruments for high growth and
  innovativeness goal
• Different depending on
• industrial structure,
• degree of development of knowledge creation
  institutions
• given strength of science technology linkages

13
A first analytical step the specialisation
pattern of a NIS

• Where lies the intellectual and technological
  strength of a nation?
• How does knowledge generation change in reaction
  to new policies, technological innovation, etc. ?
• ? Revealed Technological Advantage (RTA)
• Science e.g. France, Germany and Italy are
  specialised in chemistry, physics, mathematics
  USA wide spread
• Engineering e.g. Austria, Netherlands, Nordic
  countries, UK specialisation in clinical
  medicine

14
Emerging Specialisation Patterns Science
15
Emerging Specialisation Patterns Patenting
16
NIS Country similarities
17
NIS strength of science technology linkages
18
The institutional level relating performance to
institutions the organisation of an NSI

• For a detailed discussion of relation between
  institutional settings and economic performance
  see OECD (1999), Managing National Systems of
  Innovation, Paris