Innovation, growth and economic development: have the conditions for catch-up changed?

International Journal of Technological Learning, Innovation and Development

Volumn 1, Issue 1, 2007, Pages 13-33

  Fagerberg, Jan ^a   Verspagen, Bart ^b  

^a UNIVERSITY OF OSLO   (Norway)

^b EINDHOVEN UNIVERSITY OF TECHNOLOGY   (Netherlands)

Author keywords

catch up; economic development; growth; innovation

Indexed keywords

EID: 84870756880     PISSN: 17531942     EISSN: 17531950     Source Type: Journal    
DOI: 10.1504/IJTLID.2007.015017     Document Type: Article

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40. Specifically with regard to the data used in the current section, we use the time series for GDP per capita in constant 1995 US$, which we convert to Purchasing Power Parities (PPP, in 1995 international $) using the 1995 observation from the series of GDP per capita in current PPP.
41. Note, however, that a recent influential contribution by Sachs et al. (2004), which shares the Solowian emphasis on capital accumulation and neglect of knowledge, technology and innovation, holds that capital accumulation will only raise to the level necessary for catch up if massive intervention and support is allowed for (a low growth trap). Whatever the merits of this view, analysing development without taking knowledge, technology and innovation properly into account, provides in our view an extremely shaky ground for sweeping policy conclusions (of the type made by Sachs et al.). For a good assessment an overview of the role of factor accumulation in economic growth, see also Easterly and Levine (2001).
42. The ‘complementary factors’ are a much too complex group of variables to introduce at this stage. We come back to this later.
43. Of course, not all innovations are patented, so this a partial measure at best. Also there are big differences across sectors in the propensity to patent. However, at the aggregate (country) level, patent-based indicators of innovation correlate well with other available measures such as R&D (the availability of which is much more restricted, though, especially in a long-run perspective). See Fagerberg (1987) and Smith (2004) for an extended discussion.
44. In terms of this ‘mobility analysis’ we considered the frontrunners group in the last period as belonging to the high-income, intermediate growth cluster.
45. Our attempt to use factor analysis to measure capabilities important for development follows in the footsteps of the pioneering contributions by Adelman and Morris (1965, 1967). See also Temple and Johnson (1998) for a more recent application of the method.
46. In the discussion of the factor loadings, ‘high’ indicates a high absolute value, that is, ‘high (negative)’ points to a strongly negative value, and ‘high (positive)’ points to a strongly positive value0.
47. In recent years, a sizeable empirical literature has also emerged trying to expand the type of regression analysis presented here by pushing the search for explanatory factors far back in time (Acemoglu et al., 2001, 2002), or by taking into account other types of exogenous factors such as climate, geography, ethnic diversity, etc. (Alesina et al., 2003; Bloom and Canning, 2003; Masters and McMillan, 2001; Sachs et al., 2004). However, it might be noted that in general there is conflicting evidence and interpretation about the impact of history, geography and nature on growth (Glaeser et al., 2004). One reason for this may be that variables reflecting different causes sometimes are so strongly correlated that little can be said with certainty apart from, perhaps, that there is a joint impact (Alesina et al., 2003, p.183). Another possibility, pointed out already by Abramovitz (1994), could be that the problems that such conditions give rise to, may also spur the creation of new knowledge and new social arrangements, which eventually may totally eliminate the problems (and even making society better off over a long-run). Without denying the possibility that some of the variables that we take into account in the analysis may have been influenced by long-run exogenous factors related to history, geography and nature, we are not going to push this line of inquiry further here.
48. See for instance the evidence brought forward by Rodrik et al. (2004) in a recent analysis of the role of institutions, geography, ‘openness’ and other factors in economic development.