Innovation Economics Class 2. Shifting Heuristics in the Economics of Innovation Area of...
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Transcript of Innovation Economics Class 2. Shifting Heuristics in the Economics of Innovation Area of...
Innovation Innovation EconomicsEconomics
Class 2Class 2
Shifting Heuristics in the Shifting Heuristics in the Economics of InnovationEconomics of Innovation
Area of specialization in microeconomic Area of specialization in microeconomic theorytheory
Industrial organization, regional Industrial organization, regional economics, theory of the firm, economics, theory of the firm, microeconomics of growthmicroeconomics of growth
Birth of this area of specialization is with Birth of this area of specialization is with the discovery of the residualthe discovery of the residual
Progressive reduction in the power of the Progressive reduction in the power of the technological change as an exogenous technological change as an exogenous process: Metaphor of manna.process: Metaphor of manna.
Notion of technological opportunityNotion of technological opportunity
Origins of the Economics of Origins of the Economics of InnovationInnovation
The concept of residualThe concept of residual Economics of innovation concentrates on Economics of innovation concentrates on
the problem of explaining at the firm the problem of explaining at the firm level the process of growth of output level the process of growth of output whch cannot be explained by increases whch cannot be explained by increases in production factors.in production factors.
Solow (1957) showed that more than Solow (1957) showed that more than 40% of growth in the US economy over 40% of growth in the US economy over 1900-1949 is due to factors other than 1900-1949 is due to factors other than the traditional categories of standart the traditional categories of standart economics.economics.
Manna MetaphorManna Metaphor Manna tradition of analysis introduces a linear Manna tradition of analysis introduces a linear
sequence between scientific discoveries and sequence between scientific discoveries and technology innovations.technology innovations.
Scientist .. İnvention … scientific knowledge … Scientist .. İnvention … scientific knowledge … technological knowledgetechnological knowledge
Kenneth Arrow (1962) showed that technical Kenneth Arrow (1962) showed that technical knowledge has public good characteristics: knowledge has public good characteristics: invisibility, non-excludability, non-tradeability.invisibility, non-excludability, non-tradeability.
Market provision of efficient level of public good??Market provision of efficient level of public good?? Role of the government??Role of the government?? Analysis of technological change as an exogenous Analysis of technological change as an exogenous
processprocess
Biological Grafts: Biological Grafts: Epidemics and Life CyclesEpidemics and Life Cycles
Analysis of the delays in the adoption of given Analysis of the delays in the adoption of given technology innovationstechnology innovations
DiffusionDiffusion Time distribution of adoptionTime distribution of adoption Life cycle metaphorLife cycle metaphor Major innovations and minor innovationsMajor innovations and minor innovations Role of small firmsRole of small firms Hypothesis: Large firms are necessary for high Hypothesis: Large firms are necessary for high
rates of technological advance to take place (size rates of technological advance to take place (size shapes innovativeness)shapes innovativeness)
Hypothesis: New firms are necessary for high Hypothesis: New firms are necessary for high rates of innovation (age shapes innovativeness) rates of innovation (age shapes innovativeness)
Trajectories and Trajectories and Tecnological PathsTecnological Paths
Three contributions from the Three contributions from the philosophy of science:philosophy of science: Tacit vs. codified knowledgeTacit vs. codified knowledge Limits to rationalityLimits to rationality Entry of the notion of learningEntry of the notion of learning
Learning, cumulative features of Learning, cumulative features of learning, individual learning, learning, individual learning, organizational learningorganizational learning
Manna metaphor --- trajectories Manna metaphor --- trajectories (Kuhn; scientific evolution) (Kuhn; scientific evolution)
Endogenous innovationsEndogenous innovations Localized knowledgeLocalized knowledge Technologcal path dependenceTechnologcal path dependence Local externalitiesLocal externalities
Collective Learning and Collective Learning and NetworksNetworks
Marshallian analysisMarshallian analysis ExternalitiesExternalities SpilloversSpillovers Knowedge interactionsKnowedge interactions
New Growth TheoryNew Growth Theory
Based on:Based on: Distinction between tacit and codified Distinction between tacit and codified
knowledgeknowledge Understanding of technological Understanding of technological
externalitiesexternalities Notion of monopolistic competition as a Notion of monopolistic competition as a
result of introduction of new productsresult of introduction of new products
SummarySummary
Manna --- Product life cycle and Manna --- Product life cycle and trajectories --- network approachtrajectories --- network approach
Key features of a national Key features of a national innovation systeminnovation system
Education and trainingEducation and training Industrial structureIndustrial structure Scientific and technological capabilitiesScientific and technological capabilities S&T strengths and weaknessesS&T strengths and weaknesses Interactions among the various Interactions among the various
components of the innovation systemcomponents of the innovation system Absorption from abroadAbsorption from abroad
All of which can be quantifiedAll of which can be quantified
Population Population in the USA, EU 25 and Japanin the USA, EU 25 and Japan
0
100
200
300
400
500
Milions
USA EU Japan
GDP in the USA, EU 25 and GDP in the USA, EU 25 and JapanJapan
0
2000000
4000000
6000000
8000000
10000000
12000000
USA EU Japan
R&D in the USA, EU 25 and R&D in the USA, EU 25 and JapanJapan
0
0,05
0,1
0,15
0,2
0,25
0,3
Milyonlar
USA EU Japan
Scientific Papers inScientific Papers in the USA, EU 25 and Japan the USA, EU 25 and Japan
0
100000
200000
300000
USA EU Japan
Internet Users inInternet Users in the USA, EU the USA, EU 225 and Japan5 and Japan
0
50000000
100000000
150000000
200000000
USA EU Japan
R&D Intensity - 2001R&D Intensity - 2001
From Lisbon to From Lisbon to BarcelonaBarcelona
Make of Europe the largest knowledge Make of Europe the largest knowledge economy of the worldeconomy of the world
Reach 3 per cent in the ration R&D/GDPReach 3 per cent in the ration R&D/GDP Who has to pay for it? The business sector… Who has to pay for it? The business sector…
which should contribute about 2/3 of the which should contribute about 2/3 of the total expendituretotal expenditure
Jan Tinbergen’s lesson: economic policy is Jan Tinbergen’s lesson: economic policy is about targets and instrumentsabout targets and instruments
Where are the instruments?Where are the instruments? A pragmatic approach: the Kok ReportA pragmatic approach: the Kok Report
How has Europe done in How has Europe done in the last years? Patent the last years? Patent
datadataMean annual
granted patents at
USPTO per million people
2002-03
Mean annual granted
patents at USPTO per
million people 1997-1998
Mean annual rate of
growth from 1996-97 to
2000-01
Mean annual applied patents
at EPO per million people
2002-03
Mean annual applied patents
at EPO per million people
1997-1998
Mean annual rate of
growth from 1996-97 to
2000-01
USA 301 260 3,0% 107 80 5,9%
Japan 277 214 5,3% 135 106 5,1%
EU-15 71 54 5,6% 136 96 7,3%
EU-25 59 45 5,7% 114 80 7,4%
How has Europe done in How has Europe done in the last years? the last years?
Bibliometric dataBibliometric dataNumber of scientific
publication in 2000-01 per million people
Number of scientific publication in 1995-96
per million people
Mean annual rate of growth from 1995-96 to
2000-01
USA 700 759 -1,6%
Japan 444 390 2,6%
EU-15 556 510 1,7%
EU-25 493 448 1,9%
How has Europe done in How has Europe done in the last years? ICT the last years? ICT
expenditureexpenditureICT
expenditure (% of GDP)
2001-02
ICT expenditure (% of GDP)
1996-97
Mean annual rate of growth from 1996-97
to 2001-02
USA 7,2 7,7 -1,7%
Japan 7,5 6,9 2,2%
EU-15 6,5 5,7 3,4%
EU-25 6,5 5,6 4,1%
Which S&T Policy for the Which S&T Policy for the EU?EU?
Typical problem of deepening and Typical problem of deepening and wideningwidening
Widening: to privilege the diffusion Widening: to privilege the diffusion of knowledge in the newcomersof knowledge in the newcomers
Deepening: develop areas of Deepening: develop areas of excellence excellence