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Innovation Policies Under Economic Complexity

Author

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  • Chacua, Christian
  • Gadgin Matha, Shreyas
  • Hartog, Matte
  • Hausmann, Ricardo
  • Yildirim, Muhammed

Abstract

Recent geopolitical challenges have revived the implementation of industrial and innovation policies. Ongoing discussions focus on supporting cutting-edge industries and strategic technologies, but hardly pay attention to their impact on economic growth. In light of this, we discuss the design of innovation policies to address current development challenges while considering the complex nature of productive activities. Our approach conceives economic development and technological progress as a process of accumulation and diversification of knowledge. This process is limited by the tacit nature of knowledge and by countries’ binding constraints to growth. Consequently, effective innovation policies should be place-based and multidimensional, leveraging countries’ existing capabilities and addressing countries’ current problems. This contrasts policies that lead to economic efficiencies, such as copying other countries’ solutions to problems that countries do not currently have.

Suggested Citation

  • Chacua, Christian & Gadgin Matha, Shreyas & Hartog, Matte & Hausmann, Ricardo & Yildirim, Muhammed, 2025. "Innovation Policies Under Economic Complexity," CEPR Discussion Papers 20678, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:20678
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    Cited by:

    1. is not listed on IDEAS
    2. Nutarelli, Federico & Edet, Samuel & Gnecco, Giorgio & Riccaboni, Massimo, 2025. "Predicting the technological complexity of global cities based on unsupervised and supervised machine learning methods," Journal of Economic Behavior & Organization, Elsevier, vol. 234(C).
    3. Christian Chacua & Shreyas Gadgin Matha & Matte Hartog & Ricardo Hausmann & Muhammed A. Yildirim, 2024. "Global Trends in Innovation Patterns: A Complexity Approach," Growth Lab Working Papers 235, Harvard's Growth Lab.
    4. Weber, Jan David, 2025. "Firms, firm size distributions, industrial policies," ifso working paper series 52, University of Duisburg-Essen, Institute for Socioeconomics (ifso).

    More about this item

    JEL classification:

    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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