The Dynamics of Knowledge Externalities
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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.
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Chapter 11: Knowledge Exploitation Strategies and the Direction of Technological Change

Cristiano Antonelli and Federico Barbiellini Amidei


11.1 INTRODUCTION The distributed model of generation of technological knowledge had important consequences in terms of knowledge exploitation with the introduction of new production processes characterized by a strong capital intensity bias. More specifically, the strong directionality of technological change being introduced in the Italian economic system, especially since the 1970s, can be considered the result of two complementary dynamics: 1. a typical Marx–Hicks process of meta-substitution between production factors implemented by the introduction of technological changes directed towards the intensive use of the most abundant and convenient production factor, that since the late 1960s has increasingly been capital (Acemoglou, 1998 and 2002); the basic role of the strong interdependence between upstream and downstream sectors as a source of pecuniary knowledge externalities. In particular the vertical relations between upstream producers and downstream users of capital goods has magnified the directionality of technological change in the Italian economic growth process in favour of increasing capital intensity. As a consequence the introduction of process innovations based upon capital-intensive techniques became the prevalent form of innovation, especially in the downstream industries. 2. When the role of pecuniary externalities in knowledge exploitation is taken into account, the direction of technological change 139 M2517 - ANTONELLI PRINT.indd 139 26/01/2011 08:44 140 The dynamics of knowledge externalities emerges as a crucial and strategic factor in increasing the chances of exploitation and appropriation of knowledge by embodying it in idiosyncratic production factors. Local factor markets are major external determinants in path-dependent introduction by firms of...

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