The impact of classes of innovators on technology, financial fragility, and economic growth

Abstract

In this article, we study innovation processes and technological change in an agent-based model. By including a behavioral switching among heterogeneous innovative firms, the model is able to replicate, via simulations, well-known industrial dynamic and growth type stylized facts. The main original element of the model is that firms are allowed to endogenously change among three different classes, namely, single innovators, collaborative innovators, and imitators. Moreover, our analysis focuses on the impact of these three innovation categories on micro, meso, and macro aggregates. We find that collaborative companies are those having the highest positive impact on the economic system. Furthermore, we have paid particular attention to the role of credit market in promoting smart growth. For this purpose, we analyze the role of banks as sources of external funds for innovative entrepreneurs. Our results suggest a trade-off between short-term profit maximization and long-term efficiency, which prevents banks to foster investment in R&D and technological progress. The model is then used to study the effect that different innovation policies have on macroeconomic performance.