The Dynamics of Knowledge Externalities

The Dynamics of Knowledge Externalities

Localized Technological Change in Italy

Cristiano Antonelli and Federico Barbiellini Amidei

This book elaborates a new dependent and localized growth theory based upon knowledge externalities by making two important contributions. Firstly, it elaborates the hypothesis that total factor productivity growth stems from pecuniary knowledge externalities that consist in the access to localized external knowledge, at costs that are below equilibrium levels. Secondly, it implements the economic analysis of complex dynamic systems with a novel approach to understanding the role of knowledge interactions and knowledge governance mechanisms in the generation of new technological knowledge within economic systems characterized by webs of interdependence.

Chapter 8: Technological Change in a Distributed Innovation System

Cristiano Antonelli and Federico Barbiellini Amidei

Subjects: economics and finance, economics of innovation, innovation and technology, economics of innovation

Extract

The model of localized technological change cum pecuniary knowledge externalities elaborated in Part I provides a coherent analytical framework that implements and empowers the notion of creative reaction and localized technological change – constrained by the irreversibility of production factors that limit standard adjustment process based upon substitution processes – with the notion of pecuniary knowledge externalities. The main theme and the basic hypothesis of this book claims that an increase in wages and demand pulls can stir learning firms to actually introduce technological innovations only if, when and where the access conditions to external knowledge enable them to generate new technological knowledge at costs that are lower than equilibrium ones. This model should enable us to grasp the specific characteristics of the process of technological, structural and organizational change, experienced by the Italian economic system in the second part of the twentieth century. The rate of technological change experienced by the Italian economy was the result of the mix between the stimulations provided by the demand pull and the amount of pecuniary knowledge externalities, made available by the localized pools of technological knowledge within vertical filieres and industrial districts framed into a distributed process of knowledge generation and exploitation. The direction of localized technological change has also been influenced by the specific conditions of the localized availability of the pools of knowledge. It is clear, in fact, that firms that could rely upon vertical user–producer relations between upstream producers and downstream users of capital goods had a strong incentive to...

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