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Knowledge externalities and demand pull: The European evidence

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This paper elaborates the microeconomic foundations of the demand pull hypothesis stressing the role of vertical knowledge externalities stemming from the complementarity between know ledge interactions and user-producer transactions. The increase in the demand can pull the rate of technological change in the system when it concerns the derived demand of innovative sectors. In this framework, technological change is an emergent property of any dynamic system, where external knowledge made available by each agent plays a key role in the introduction of innovations by each other agent. Demand pulls the introduction of innovations when and where it comes from innovative customers. Using input output tables that grasp user-producer interactions, the paper provides an empirical test of these hypotheses for 15 European countries in the years 1995-2007. The evidence confirms that the in crease of total factor productivity of the upstream supplying sectors is positively influenced by the sector-level derived demand, according to the rates of introduction of innovations and to the intensity of their user-producer interactions. The policy implications of the analysis enable to elaborate and implement the notion of a ‘competent’ public demand.

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  • Antonelli,Cristiano & Gehringer,Agnieszka, 2012. "Knowledge externalities and demand pull: The European evidence," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201214, University of Turin.
  • Handle: RePEc:uto:labeco:201214
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    Cited by:

    1. Gehringer, Agnieszka & Martínez-Zarzoso, Inmaculada & Nowak-Lehmann Danzinger, Felicitas, 2014. "TFP estimation and productivity drivers in the European Union," Center for European, Governance and Economic Development Research Discussion Papers 189, University of Goettingen, Department of Economics.
    2. Valeria De Bonis, 2016. "Innovation, competition and public procurement in the pre-commercial phase," Public Finance Research Papers 23, Istituto di Economia e Finanza, DSGE, Sapienza University of Rome.
    3. Antonelli Cristiano & Gehringer Agnieszka, 2013. "Demand pull and technological flows within innovation systems: the intra-European evidence," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201303, University of Turin.
    4. Cristiano Antonelli & Agnieszka Gehringer, 2015. "The competent demand pull hypothesis: which sectors do play a role?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 32(1), pages 97-134, April.
    5. Wolfgang Britz & Roberto Roson & Martina Sartori, 2019. "SSP Long Run Scenarios for European NUTS2 Regions," Working Papers 2019: 22, Department of Economics, University of Venice "Ca' Foscari".
    6. Cristiano Antonelli, 2017. "Endogenous innovation: the creative response," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(8), pages 689-718, November.
    7. Caravella, Serenella & Crespi, Francesco & Guarascio, Dario & Tubiana, Matteo, 2020. "Competitive strategies, heterogeneous demand sources and firms’ growth trajectories," GLO Discussion Paper Series 442, Global Labor Organization (GLO).
    8. Gehringer, Agnieszka, 2016. "Knowledge externalities and sectoral interdependences: Evidence from an open economy perspective," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 240-249.
    9. Francesco Crespi & Serenella Caravella, 2020. "The Role Of Public Procurement As Innovation Lever: Evidence From Italian Manufacturing Firms," Departmental Working Papers of Economics - University 'Roma Tre' 0252, Department of Economics - University Roma Tre.

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    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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