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Innovation Policies Under Economic Complexity

Author

Listed:
  • Christian Chacua

    (Harvard's Growth Lab)

  • Shreyas Gadgin Matha
  • Matte Hartog

    (Center for International Development at Harvard University)

  • Ricardo Hausmann

    (Harvard's Growth Lab)

  • Muhammed A. Yildirim

    (Center for International Development at Harvard University)

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

  • Christian Chacua & Shreyas Gadgin Matha & Matte Hartog & Ricardo Hausmann & Muhammed A. Yildirim, 2024. "Innovation Policies Under Economic Complexity," Growth Lab Working Papers 234, Harvard's Growth Lab.
    • Handle: RePEc:glh:wpfacu:234
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    innovation policy; industrial policy; economic complexity; knowhow;
    All these keywords.

    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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