Abstract
We study an endogenous stochastic growth model whose dynamic evolution is determined by an adaptive learning process defining the accumulation of technological knowledge within countries. Both the assimilation of technological knowledge and the arrival rate of innovations depend on the technological development level of countries. We illustrate how heterogeneous levels of technological development provide laggard countries with insufficient innovation incentives, leading to divergences in total factor productivity and their technological stagnation. The model is simulated numerically using data from the current Innovation Union Scoreboard where the main expected growth patterns of the Baltic States are compared to those of the reference innovators within the European Union area.
Highlights
The introduction and assimilation of new technologies by firms and countries, as well as their innovation and manufacturing processes, require the existence of a skilled labor force and a developed technological infrastructure or national system of innovation. This infrastructure, whose quality is determined, among others, by the existence of techno-economic webs and industrial districts (Furman et al 2002), limits the ability of firms and countries to innovate and learn through manufacturing, since it must develop simultaneously to the knowledge acquired by workers in order to be implemented efficiently (López et al 2011). Such a constraint implies that innovation and manufacturing require both a continuous learning process among workers as well as the existence of a solid technological base at the country level
The processes of technological development and economic growth require the building of absorptive capacities in order for countries to master any imported technological knowledge
The current paper concentrates on the effects that the assimilation of technological knowledge and the innovation incentives that result from it have for the economic growth of countries
Summary
The introduction and assimilation of new technologies by firms and countries, as well as their innovation and manufacturing processes, require the existence of a skilled labor force and a developed technological infrastructure or national system of innovation This infrastructure, whose quality is determined, among others, by the existence of techno-economic webs and industrial districts (Furman et al 2002), limits the ability of firms and countries to innovate and learn through manufacturing, since it must develop simultaneously to the knowledge acquired by workers in order to be implemented efficiently (López et al 2011). A positive relation between R&D, innovation, and productivity has been found for newly industrialized Asian countries, see
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