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Understanding absorptive capacities in an "innovation systems" context consequences for economic and employment growth

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Rajneesh Narula

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Abstract

This paper seeks to broaden our understanding of the concept underlying absorptive capacity at the macro –level, paying particular attention to the growth and development perspectives. We provide definitions of absorptive and technological capacity, external technology flows, productivity growth, employment creation and their interrelations. We then analyse the elements of absorptive capability, focusing on the nature of the relationship within a systems view of an economy, focusing primarily on the role of firm and non-firm actors and the institutions that connect them, both within and across borders. We also undertake to explain how the nature of absorptive capacity changes with stages of economic development, and the importance of the different aspects of absorptive capability at different stages. The relationship is not a linear one: the benefits that accrue from marginal increases in absorptive capability change over time. Finally, we provide a tentative and preliminary conceptual argument of how the different stages of absorptive capacity are related to productivity growth, economic growth and employment creation.

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Paper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 04-02.

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Date of creation: 2004
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Handle: RePEc:aal:abbswp:04-02

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Keywords: New economy; absorptive capacity; knowledge;

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Find related papers by JEL classification:
O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Etzkowitz, Henry & Leydesdorff, Loet, 2000. "The dynamics of innovation: from National Systems and "Mode 2" to a Triple Helix of university-industry-government relations," Research Policy, Elsevier, vol. 29(2), pages 109-123, February. [Downloadable!] (restricted)
  2. Glass, Amy Jocelyn & Saggi, Kamal, 1998. "International technology transfer and the technology gap," Journal of Development Economics, Elsevier, vol. 55(2), pages 369-398, April. [Downloadable!] (restricted)
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  5. Marco Vivarelli, 2007. "Innovation and Employment: A Survey," IZA Discussion Papers 2621, Institute for the Study of Labor (IZA). [Downloadable!]
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  7. Xu, Bin, 2000. "Multinational enterprises, technology diffusion, and host country productivity growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 477-493, August. [Downloadable!] (restricted)
  8. Narula,Rajneesh & Criscuolo,Paola, 2002. "A novel approach to national technological accumulation and absorptive capacity: Aggregating Cohen and Levinthal," Research Memoranda 018, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
    Other versions:
  9. Rodrik, Dani & Subramanian, Arvind & Trebbi, Francesco, 2002. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," CEPR Discussion Papers 3643, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  10. Jeffrey James & Henny Romijn, 1997. "The determinants of technological capability: A cross-country analysis," Oxford Development Studies, Taylor and Francis Journals, vol. 25(2), pages 189-207. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Cimoli, Mario & Pereira, Wellington & Porcile, Gabriel & Scatolin, Fabio, 2008. "Structural Change, Technology, and Economic Growth: Brazil and the CIBS in a Comparative Perspective," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  2. Tobias Schmidt, 2005. "Absorptive Capacity – One Size Fits All? A Firm-level Analysis of Absorptive Capacity for Different Kinds of Knowledge," Industrial Organization 0510010, EconWPA. [Downloadable!]
    Other versions:
  3. Mario Cimoli & Marcio Holland & Gabriel Porcile & Annalisa Primi & Sebastiàn Vergara, 2006. "Growth, Structural Change and Technological Capabilities. Latin America in a Comparative Perspective," LEM Papers Series 2006/11, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
  4. Narula ,Rajneesh & Marin ,Anabel, 2005. "Exploring the relationship between direct and indirect spillovers from FDI in Argentina," Research Memoranda 024, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
  5. Narula ,Rajneesh, 2005. "Globalisation, EU expansion and consequences for MNE location," Research Memoranda 003, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
  6. Lall, Sanjaya & Narula,Rajneesh, 2004. "FDI and its role in economic development: Do we need a new agenda?," Research Memoranda 019, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
  7. Szogs, Astrid, 2008. "The Role of mediator organisations in the making of innovation systems in least developed countries. Evidence from Tanzania," CIRCLE Electronic Working Paper Series 2008-19, CIRCLE (Centre for Innovation, Research and Competence in the Learning Economy), Lund University. [Downloadable!]
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