Chapter 6: Competent demand
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Demand as a pulling factor of productivity growth and innovation has been an intensively debated issue. The underlying demand-pull hypothesis has been contested by the view that science and technology are the determining forces shaping industrial development. The missing consensus has been driven by the macroeconomic - as opposed to micro-founded - framework of analysis, within which the demand supposed to provide positive impulses was deemed to be generic. However, demand must be competent rather than generic to generate fruitful user-producer interactions-cum-transactions that eventually lead to an effective pulling towards innovative outcomes. Also, the micro-founded view at the economic complexity of knowledge generation process leads to appreciate that through such market-based user-producer knowledge interactions, pecuniary knowledge externalities occur, thanks to which upstream suppliers benefit from knowledge spilling over from their competent customers. The exploitation of pecuniary knowledge externalities originated by competent demand fuels eventually productivity growth and innovation.

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