Transcript Technological change as an evolutionary process

Technological change as an
evolutionary process
Technology and Economic
Development:
A comparative perspective
by
S. Metcalfe, CRIC WP, 2001
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Introduction
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The aim of the article is to analyze the claim
that
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The connection between technology and
development can not solely be understood as a
macroeconomic phenomenon
The accumulation of capital, human, intellectual or
material are also important
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creative destruction and structural change
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Introduction
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Development an adaptive evolutionary process:
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as a process of the cumulative unfolding of phenomena
as the selective maintenance of superior variants in a
population of competing alternatives
Economy as an evolving system and an adaptive,
experimental system
The interaction between the growth of knowledge
and market process is the key to understanding
development and innovation is the manifestation of
this process
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Introduction
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The relation between firms, markets and public policies in terms
of the use and acquisition of technological knowledge
Why emphasis on the firm?
Due to its uniqueness in the role of
 Articulating technologies on the productive effect
 Combining knowledge of technology with the knowledge of
organization and market
 As problem generators and locations for technological and
economic learning
A comparison between two views of the firm, “neoclassical”,
“evolutionary”
 Passive versus creative & learning firm
 Resource allocation, given knowledge opportunities versus
created ones
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Introduction
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Evolutionary theory
Firm being the principal agency in the economy for the creative
development and application of technology
 Development of a firm as a productive unit versus the
development of the wider economy
Economic development: adaptation within and between firms
Creative development process with process of market
adjustment
Key words in evolutionary economics: variation, selection
and the development of new forms
The problem of development is a problem of the differential
access to practical and productive knowledge
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The production function and the theory of
the firm
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The production function and the theory of the firm
“technology”
Three concepts: activity, transformation,
organization
Human dimension in relation to transformation
process (that is a technological recipe for
production): technologies of management and
organization, labor, knowledge
Technology: codifiable and tacit
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Polanyi (1962) “we know more than we can say, we can
say more than we can write”
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Technology and Innovation:
The neoclassical viewpoint
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Technology as a set of fully known blueprints, codified
knowledge available from the “universal blueprint library”
Producing the particular level of output at a minimum cost given
the knowledge of the relative prices of the factor services
(technology)
Link between technical opportunities and economic choices
(productivity, the elasticity of substitution, factor intensity)
What determines the production set if not contained in a
universal library?
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Specified by the knowledge contained within the firm
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How about any changes of technique that needs learning and the growth
of new knowledge
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Technology and Innovation:
The neoclassical viewpoint
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The state of technical arts “ manna from heaven” →
knowledge as a non-rival good
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Knowledge could be used any number of times by any
number of firms to produce any quantum of output or
indeed to develop new knowledge
Knowledge costless to transmit but not costless to
absorb
Present state of accumulated knowledge matters
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Fact: knowledge costly to produce, costly to absorb
and absorptive capacity depends on prior acquisition
of knowledge
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Technology and Innovation:
The neoclassical viewpoint
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Differences in innovation possibility sets are
the rationale of different production possibility
sets
Learning depending on experience by itself
diversifies between firms generating different
innovation locus (locally bounded pattern of
technological development)
Creativity; local and radical
Why different capabilities to innovate and to
produce between firms?
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Evolutionary approach
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How and why do firms differ in their productive
capabilities?
The focus on adaptive response that is also creative
Local rationality but variation (not uniformity)
Firm creative, imaginative entity and the outcome of
ongoing and unfinished process of organizational
design
Penrose “ the capability theory of the firm” → the
competence of the firm
The central feature of the capabilities perspective
lies in its link with the creation and exploitation of
knowledge → continual development of capabilities
and creating new ones, “routines”
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Technical change and development from
an evolutionary perspective
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Why the technological change and development is
an evolutionary problem?
It requires:
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Variation in performance relative to international
competitors
Structural change in domestic and international economies
(selection)
Generation of innovation to keep pace with world
developments
Three concepts of building blocks of economic
evolution: variation, selection and generation
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Technical change and development from
an evolutionary perspective
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Variation
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Selection
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The competitive process by which the different technological
capabilities acquire different levels of economic significance over
time
Variation and selection → generation
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Differences between firms in their economic performance traceable
to the differences in their technological and organizational
capabilities
Idiosyncratic dimension of firms
Development by imitation and dynamic competition
Creative capacity “innovative variation”
The nature of the firm as an experimental agency embedded in
market process as well as its nature as a productive agency is at
the forefront of the evolutionary analyses of technological change
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The policy dimension
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Science and technology policy versus innovation policy
 Innovation policy “much broader”
 It is concerned with the economic exploitation of
practical knowledge with the flow of resources to
support knowledge accumulation within and between
firms
Classical viewpoint → firms know opportunities but fail to
exploit them effectively because of market failure
induced divergence in the private and social rates of
return from investments in knowledge and innovation
Role of optimizing policy maker is to correct these
divergent incentives by fiscal arrangements and grants
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The policy dimension
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Evolutionary viewpoint → also a matter of the knowledge
and skill to define a space of possibilities
Policy makers to create a rich ecology of organizational
and institutional support for knowledge absorption and
generation and to support the development of the
associated innovative capabilities → adaptive not
optimizing
Innovative capabilities depend on the links between
users, suppliers and non-firm organizations
Innovation systems → modular (adaptive and
evolutionary)
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Conclusion
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The link between economic development and
technological knowledge is difficult to solve
The acquisition of technological mastery depends on
 The nature of supporting national innovation
infrastructure
 The capabilities of individual firms
Firms are unique and crucial in their role of adapting and
combining different kinds of knowledge
These distinct capabilities are accumulated and
combined and the adaptive evolutionary process in
which they are exploited and translated into development
makes the process a matter of collaborative learning
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