Innovation and demand in industry dynamics
AbstractThe links between three interconnected elements of the Schumpeterian sources of economic change are explored, conceptually and empirically, in this paper: the commitment of industries to invest profits in cumulative R&D efforts; the ability of industries’ R&D to lead to successful innovations; the impact of new products and processes on high entrepreneurial profits. We consider the nature and variety of innovative efforts – distinguishing in particular between strategies of technological and cost competiveness – and we introduce the role of demand in pulling technological change and supporting profits. We develop a simultaneous three-equation model and we test it at industry level – for 38 manufacturing and service sectors – on eight European countries over two time periods from 1994 to 2006. The results show that the model effectively accounts for the dynamics of European industries and highlights the interconnections between the different factors contributing to growth.
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Bibliographic InfoPaper provided by University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini in its series Working Papers with number 1101.
Length: 14 pages
Date of creation: 2011
Date of revision: 2011
R&D; Innovation; Profits; Demand; System Three Stages Least Squares.;
Find related papers by JEL classification:
- L6 - Industrial Organization - - Industry Studies: Manufacturing
- L8 - Industrial Organization - - Industry Studies: Services
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-02-26 (All new papers)
- NEP-CSE-2011-02-26 (Economics of Strategic Management)
- NEP-ENT-2011-02-26 (Entrepreneurship)
- NEP-INO-2011-02-26 (Innovation)
- NEP-SBM-2011-02-26 (Small Business Management)
- NEP-TID-2011-02-26 (Technology & Industrial Dynamics)
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- Mario Pianta & Andrea Vaona, 2006.
"Innovation and Productivity in European Industries,"
Kiel Working Papers
1283, Kiel Institute for the World Economy.
- Mario Pianta & Andrea Vaona, 2007. "Innovation and Productivity in European Industries," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(7), pages 485-499.
- Mario Pianta & Andrea Vaona, 2006. "Innovation and productivity in European industries," Working Papers 34, University of Verona, Department of Economics.
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