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Technological Change and Economic Catch-up

The Role of Science and Multinationals

Edited by Grazia D. Santangelo

This book tackles the issue of technological and economic catch-up by examining the role that public research institutions and local policy play in the promotion of this process by fostering local science–technology linkages with incoming foreign-owned multinationals. Although the book comprises various techno-socio-economic contexts and different methodological perspectives, the authors share the idea that public research, educational and political institutions provide capabilities in basic research and training of highly skilled labour, while private corporations establish networking connections with scientific and professional communities (and therefore access to knowledge and contacts) in other parts of the world.
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Chapter 1: The Economics of Localized Technological Change: The Role of Creative Adoption

Cristiano Antonelli


Cristiano Antonelli 1. INTRODUCTION The study of technological change has made a great deal of progress by means of artificial disjunctions between aspects that are difficult to separate.2 The traditional divide between innovation, adoption and imitation can be reconciled in the context of the economics of localized technological change. Adoption is the result of a complex process of decisionmaking. Firms are induced to change their technology when product and factor market conditions do not meet their expectations and irreversible choices make adjustments expensive. Technological change consists of both the introduction of original, ‘never-before-seen’ technologies and the adoption of technologies that have already been put in place elsewhere. Indeed, adoption requires a number of highly specific and idiosyncratic problems of adaptation and integration to be solved. Moreover, it requires that several preliminary activities are carried out, such as search, selection, identification, adaptation and integration into the production process and the firm at large. Technological change, for each firm, is the result of both research and imitation activities. Both command resources and engender specific revenues. Localized technological change consists of creative adoption where external knowledge and embodied technologies are implemented with internal competence and idiosyncratic knowledge acquired by means of learning processes. The identification of the net profitability of adoption as defined by the gross profitability of adoption minus adoption costs constitutes the economics of creative adoption. The rest of the chapter is structured as follows. Section 2 recalls the basic features of...

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