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Directed Technological Change and Technological Congruence: A New Framework for the Smart Specialization Strategy

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Technological congruence implements the analysis of directed technological change showing how the match between the relative size of outputs’ elasticity and the relative abundance and cost of production factors has powerful effects on total factor productivity (TFP). Smart specialization strategies can rely upon technological congruence to support the introduction and diffusion of new directed technologies characterized by the best mix of factors relative cost -as determined by pecuniary externalities in the regional factor markets- and output elasticity. The evidence of 278 European regions in the years 1980-2011 confirms that the levels and the changes in technological congruence, brought about by the introduction of directed technological changes, have significant effects on the levels and the changes of TFP. The key policy implication is that the optimal S3 policy mix should not only look at the history of local industrial or technological specializations, but it should also take into account the pecuniary externalities that characterize local factor markets to promote technological changes directed to augmenting the output elasticity of the cheaper regional production factors.

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  • Antonelli, Cristiano & Feder, Christophe & Quatraro, Francesco, 2018. "Directed Technological Change and Technological Congruence: A New Framework for the Smart Specialization Strategy," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201805, University of Turin.
    • Handle: RePEc:uto:dipeco:201805
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