[D] Innovation and Technological Change

Coordinators: Andreas Pyka
University of Hohenheim, Germany
a.pyka@uni-hohenheim.de
Ben Vermeulen
University of Hohenhein, Germany
b.vermeulen@uni-hohenheim.de
Introduction to the theme ‘Technological change’

Since the dawn of man, people have made technical artifacts to bring prosperity to their community. In the 18th century, a synergistic mix of steam-powered mechanization and entrepreneurial activities in a capitalistic market sparked a snowballing of inventions. Ever since this industrial revolution, countries in the Western world embarked on an unprecedented economic growth path, ultimately dragging along other countries in the slipstream. Indicative of the significance of technological change for economic growth is the observation of Robert Solow in the late 1950s that roughly four-fifth of the economic growth in the USA is to be attributed to technological change in the form of increasing efficiency of production, introduction of new products, etc. Joseph Schumpeter argued that, in a competitive market, firms force each other to innovate their products, processes, and business models to reap monopolistic rents until competitors catch up. Given the competitive importance, firms progressively institutionalized research & development over the years. As firms thereby also exploit fundamental scientific progress in fields as chemistry and physics, yet there is a market failure for such scientific research (due to the limited appropriability of its discoveries), government stepped in with financial support.

However, technology research & development alone is not enough for economic growth. Picking up on notions of Marx and Engels, Luigi Pasinetti argued that process innovation (bound to occur in the mature stage of the product life-cycle) causes obsolescence of labor in existing sectors, such that structural change (and notably spawning of new sectors) is a precondition for sustained economic growth. So, arguably, growth in the real economy is due to snowballing of technological development (driven by perpetuating technological competition) interlocked with progressive extension & specialization of labor and spawning of new industrial sectors absorbing surplus labor.

Although technological progress and its ensuing economic growth may enhance welfare, health, and longevity, all of which is desirable, unfettered capitalism is not a panacea. Fierce competition in a free market invites externalization of environmental costs, causes concentration of capital & social inequalities, features tragedies of the commons (e.g. overproduction, overexploitation, redundancy in activities), etc. Consequently, diverse scholars have advocated in favor of governmental regulation to curb such adverse effects of capitalism. In our view, sustainable, innovation-driven economic growth requires (i) Schumpeterian competition on technology in the private sector, (ii) (fundamental) R&D in the public sector, and (iii) institutional regulation that guides technological change, counters adverse effects of capitalism, and safeguards societal interests.
 
Work invited
This research area is devoted to scientific inquiry into technological change and innovation process in the broadest sense. We invite theoretical work, (historical) case studies, econometric inquiries, and computational models, but also meta-level studies of the field of technological change and the branching out of theories of technological change into other fields in economics.
 
Theoretical work
We invite work expanding the theoretical understanding of technological and structural change in the sense of Marx, Schumpeter, and Pasinetti. Theoretical contributions to the emerging field of transition studies are also more than welcome.
 
(Historical) case studies
We are interested in (historical) case studies of technological change. This may be the description of the actual invention and accumulation of technical artifacts by hominids, a study of industrial R&D in a big biotechnology corporation in the present day, or an analysis of the development of a green energy cluster in Portugal. We are also interested in technology transition studies.
 
Econometric studies
Given that the current scientific understanding of technological change is rather limited, we invite econometric inquiries into innovation processes and how these affect and are affected by (i) the geographical distribution, organizational relationships, and network topology of agents involved, (ii) properties of the technology regime, sector, innovation system, and the industry, and/or (iii) the institutional and political driving forces. Not uncommonly, researchers analyze patent and trademark databases, innovation survey data, trade data, etc.
 
(Agent-based) computational models
We are interested in a wide range of computational models dealing with technology development and technological change, including but not limited to:
  • computational models of technology development  (e.g. NK landscape model; Silverberg & Verspagen percolation model; fractal landscape model)
  • neo-Schumpeterian models of industry evolution under technological competition (e.g. Fagiolo & Dosi island-sea model; Klepper model; Gilbert, Pyka & Ahrweiler SKIN model; Silverberg & Verspagen vintage model)
  • history-friendly or empirically calibrated models of industry evolution (e.g. for policy or strategy evaluation)
  • models of co-evolution of demand and supply and diffusion & adoption of innovations
We prefer work following the current agent-based model paradigm, but will definitely not automatically reject work following formal methods, the system dynamics paradigm, etc.
 
Meta-level discussion
We also invite work discussing of the evolution of the field of technological change (in terms of the topics mentioned above) and the branching out of its theories, observations, and models to economics and other social sciences.
 
Requirements on submissions 
Submitted work may be in progress but will be reviewed on the match with the research area theme (and the supposed interest of the audience), scientific rigor & validity, societal & scientific relevance, and lucidity. We encourage every participant to add policy implications to its presentation.