Catching-up Innovation and Diffusion Processes

The present book is a compendium of research themes on which I have worked on for some years. A previous version of this book has been published by the Center for Sydeuropæiske Studier, at Roskilde Universitet Center. The central focus of the book is the link between technological change and economic growth. The starting point for the first chapter is the catching-up approach followed by countries that presented a 'technology-gap' in relation to the most advanced countries. Some of these catching-up strategies have been successful, others not, due to the impossibility of reaching that the minimum critical threshold which enables continua-tion of the ascending cumulative process described by Myrdal (1966). The second part of the chapter is devoted to the convergence theory. In current literature, the term 'catching-up' has also been identified with the so-called convergence controversy. After an exposition of different approaches to convergence, its neo-classical theoretical background is highlighted. The convergence theory is then linked to the upsurge of the new growth theory. The persistence of divergence between advanced and developing countries has led new growth theorists to strongly criticise the neoclassical approach. The works of the New Growth Theory have dealt with increasing returns and technological change as a result of things that people do in response to market incentives. The newest part of this approach has also been called neo-Schumpeterian and contrasts with another Schumpeterian approach to the growth and catching-up processes that is very different from the new growth theorists' works, all of which rely on the theoretical background to mainstream economics. This alternative Schumpeterian approach rests on the assumption that growth is an evolutionary process in which technological change plays prominent role. According to this school of thought, the differentials between countries can be accounted for differences in technological capabilities and path-dependencies. The chapter finishes with an empirical test on the role of different types of human capital in economic growth. The results are interesting since they demostrate that the accumulation of human capital has to increase every time if sustained growth must be reached. The second chapter is devoted to the exposition of a growth model that deliberately assumes an evolutionistic perspective. When this perspective is introduced, a learning capability becomes the necessary corollary to explain how agents react and survive in different environments and markets. The Lamarkian learning capability passes through implicit and explicit mechanisms of learning, such as the dynamic economies of production, technology transfer, human capital accumulation and R&D intensity. The model states that these learning mechanisms can be used to counterbalance the Darwinian divergent mechanism deriving from a country's inherited initial conditions. The third chapter introduces adoption decisions and the diffusion of innovations in the presence of different types of investment, adopters, innovation, and propensity to risk. It is analysed that for two fundamental reasons firms in the adoption process do not all find themselves in the same situation. The first concerns the type of investment that the firm has to confront (growth, replacement, displacement), the second, the type of risk the firm is able to run. The combination of these two situations shows that innovation, when it has to be evaluated for adoption, finds itself faced with demands of an extremely diverse nature. This means that the population of possible adopters is not constituted by firms that have the same probability of adopting at each moment. The fourth chapter is conceived rather differently from the previous ones. Its scope is to discuss the diffusion processes. The aim of the first section is to consider the diffusion of innovations from a different point of view, from either the theoretical or the empirical and, in this sense, the classic scheme to the studies on diffusion of process innovations (intra-firm diffusion, inter-firm diffusion, inter-regional and international diffusion) it is adopted. The second section faces an exposition of the main approaches in diffusion theory. According to Stoneman (1987) there are basically three different theoretical approaches to an analysis of diffusion phenomena: (i) the information-based, (ii) the difference-based, and (iii) the game-theoretic model. I have decided to add a fourth approach, (iv) the characteristics-based models, which seems, to me, to match very well with the current diffusion of information technologies. All four approaches are presented and discussed according to their main theoretical features.