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The economics of technological congruence

Technological congruence is defined by the matching between the relative size of outputs’ elasticity with the relative abundance and cost of inputs in local factor markets. With given total costs, output is larger the larger is the output elasticity of the cheapest input. Technological congruence is a powerful tool that helps grasping many controversial aspects of growth accounting, international division of labor and specialization, technological and structural change. For years, it had received little attention because of the wide consensus that technological change was exogenous and neutral. But also subsequently, notwithstanding the developments made in the endogenous growth modeling, little attempt was made to provide a more advanced understanding of technological congruence. Its appreciation stems directly from the advances of the economics of innovation and its recent developments in understanding the endogenous determinants of the introduction and diffusion of directed technological changes. The levels of technological congruence are most relevant to influence the actual efficiency and to shape the competitive advance of firms and countries.

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Paper provided by University of Turin in its series 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 Carlo Alberto. WP series with number 201304.

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Length: 13 pages
Date of creation: Apr 2013
Date of revision:
Handle: RePEc:uto:labeco:201304
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