Technical progress, innovative activity and development policies
by Massimo Ricottilli
International Journal of Technology Management (IJTM), Vol. 9, No. 3/4, 1994

Abstract: The paper places endogenous innovative activity at the centre of the development process. It is held that innovation is both the prerequisite and in a dynamical context the consequence of specialisation. To show this, a concept of technique of production is elaborated in which purely technical features – merge with organisational characteristics. Microeconomic behaviour is then discussed on the assumption of limited and bounded rationality, and it is shown to lead through learning and localised search to problem solving and innovative change. The latter, however, upsets achieved equilibria, procedural routines and the technical structure of production processes. Specialisation is seen to arise as a consequence. Since technical advancement induces investment, economic activity expands to set off an endogenous growth process reinforcing innovative change. The latter is therefore cumulative, path-dependent and evolving on a trajectory. The interesting but complex dynamics of growth and long-term development require, however, an appropriate institutional context which is discussed in the context of policy implications. Policy is, in fact, called upon to resolve the conflict between regressive resistance to change and progressive advancement which are both generated by the process. Development policies are above all industrial policies. This point is discussed by supporting the view that public intervention can foster and enhance innovative activity and required human capabilities.

Online publication date: Sat, 23-May-2009

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