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 12: Knowledge Generation and Vertical Dynamic Interdependence Within Industrial Filieres: Econometric Evidence on Total Factor Productivity Growth

Cristiano Antonelli and Federico Barbiellini Amidei


12.1 INTRODUCTION We now want to test the hypothesis that the Italian case was, for four decades after World War II, an example of a virtuous innovative system, developing and emphasizing the interdependence between innovative processes across manufacturing industries. The relevance of dynamics of sectoral relationships is a remarkable feature of Italian technological and structural change in the 1950–80s period. The hypothesis of the emergence of an original Italian innovation system can also reconcile the evidence of low levels of innovative activity, as measured by traditional indicators, such as R&D or patents, and high levels of total factor productivity, and try to solve the apparent Italian paradox. The interpretive model put forward can form the basis of an empirical investigation making it possible to draw attention to the plurality of innovative mechanisms operating in the Italian industrial system. 12.2 THE SECTORAL EVIDENCE Looking across industrial sectors, the following hypotheses can be formulated: 1. In the whole industry, TFP increased as the result of the 162 M2517 - ANTONELLI PRINT.indd 162 26/01/2011 08:44 Knowledge generation and vertical dynamic interdependence 163 2. 3. introduction of technological (process and product) innovations induced by growth in aggregate demand and in wages; Innovative activity and growth in the upstream sectors were stimulated by the combination of expansion of the derived demand for capital goods and intermediary inputs in the downstream sectors (Smith–Young–Kaldor demand pull innovation processes) and of the setting in motion of a process of localized technological change (learning...

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