Handbook of Innovation Systems and Developing Countries
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Handbook of Innovation Systems and Developing Countries

Building Domestic Capabilities in a Global Setting

Edited by Bengt-Åke Lundvall, K. J. Joseph, Cristina Chaminade and Jan Vang

This Handbook is the first attempt to adapt the IS approach to developing countries from a theoretical and empirical viewpoint. The Handbook brings eminent scholars in economics, innovation and development studies together with promising young researchers to review the literature and push theoretical boundaries. They critically review the IS approach and its adequacy for developing countries, discuss the relationship between IS and development, and address the question of how it should be adapted to the realities of developing nations.
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Chapter 4: Innovation Systems, Technology and Development: Unpacking the Relationships

Jan Fagerberg and Martin Srholec


Jan Fagerberg and Martin Srholec 4.1 Introduction The idea that technology plays an important role in development has been around for a long time. Nearly a century ago Thorstein Veblen used evidence from the German industrialization process to argue that technological catch-up by industrial latecomers was indeed possible, and that several other countries such as, for example, Japan would be likely to exploit this opportunity (Veblen, 1915). After the Second World War this optimistic scenario was taken over by the neoclassical strand in economics, which gradually came to dominate the discipline (Solow, 1956, 1970). According to this way of thinking, technology should be seen as a freely available ‘public good’, facilitating development everywhere as long as markets are allowed to ‘do their job’ properly. However, from the 1960s onwards the view, put forward by among others the economic historians Alexander Gerschenkron and Moses Abramovitz (Gerschenkron, 1962; Abramovitz, 1979, 1986), that differences in development were mainly caused by technological differences and that technological catch-up by latecomers was far from easy, gained increasing support. This view of technology received further backing from a series of empirical studies of industrialization processes in Asia and Latin America (Kim, 1980; Fransman, 1982; Fransman and King, 1984; Dahlman et al., 1987; Lall, 1987). At the macro level this led to the formulation of the so-called ‘technology gap theory of economic growth’ (Fagerberg, 1987, 1988; Verspagen, 1991). The focus on technology as the driving force of growth and development has been taken up by advocates of the...

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