Abstract
Innovation scholars have highlighted that technological revolutions generate long-run fluctuations in innovative and economic activity. This paper aims at examining whether such fluctuations are endogenous or exogenous. This question is particularly important with respect to the current debate on the productivity slowdown and a potential new technological revolution. We propose a framework that integrates both endogenous and exogenous factors. On the one hand, the economic system tends to generate endogenously, and therefore recurrently, technological revolutions, structural change, and associated long-run fluctuations of production. This tendency is explained via a process of co-evolution between investment in innovation and demand, based on cumulative multiplier and accelerator feedback effects. On the other hand, exogenous factors are expected to exert a major impact upon this endogenous process by influencing the length and amplitude of fluctuations, i.e., the timing and economic impact of technological revolutions. Exogenous factors may include random historical events (e.g., wars), technical factors, public policies, and socio-institutional actors. To provide a preliminary evidence supporting the framework, we have fitted the ICTs (Information and Communications Technologies) cycle and the economic cycle to patent and productivity data, respectively. Our results suggest that the current productivity slowdown may be a signal that the economic system needs to change its leading technologies. This phase of technological ferment may represent an important and rare opportunity, for public policies and socio-institutional actors, to orient future development toward socially desirable directions.
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