This collection of essays is a culmination of many years of research on the economics of innovation and innovation studies. They mark Jan’s retirement from the TIK centre, but they do not mark the end of his distinguished career.
Mark Knell, Research Professor, NIFU
Jan Fagerberg’s book Innovation, Economic Development and Policy Selected Essays contains eighteen of his most illuminating essays on research policy published over the past two decades. Many essays are co-authored, which adds to the richness of the book. A previous volume contains earlier essays. 1
What we know about innovation
These essays consider various aspects of research and innovation policy, and they also explore some fundamental questions about innovation and the knowledge underlying these ideas. They consider how innovation policy influences economic growth and competitiveness, as well as the role that social and technical capabilities play in economic development.
The book is organized into four parts.
Part I provides a general synthesis of the evolving interdisciplinary field of innovation studies and some of the most important issues relevant for economic theory and history.
The second part analyses innovation studies as an emerging scientific field of study and who has been important in developing this field.
Part III focuses on the relationship between innovation, growth and competitiveness, and how technical change and technological learning make it possible for countries to catch up to the technology frontier. The final section explores the evolution of national innovation systems and some of the challenges that both developed and developing countries face, especially climate change.
There are many different ways to approach this book. My favourite way is to consider it as an important contribution to the history of economic thought. Both the classical and neoclassical economists consider technology (technical conditions or technical alternatives) as data of the theory. The narrative contains many interesting puzzles and unresolved problems, creating much fodder for the author. This should provide plenty of opportunity to find alternatives to the theory.
Innovation as an economic concept is generally traced back to the work of Joseph Schumpeter, who published Theorie der wirtschaftlichen Entwicklung (Theory of Economic Development) in 1911.
Schumpeter introduced the entrepreneur as an agent of change with the function of carrying out new combinations of resources available to the enterprise. As agents of change, they earn entrepreneurial profits above the normal rate of return for bringing novelty to the market.
Innovation was part of the economic process itself with the actions of cost-minimizing capitalists generating a tendency toward equilibrium through the search for investment opportunities, and the actions of profit-seeking entrepreneurs engendering disequilibrium behaviour through the introduction of new products, markets, methods of products, and new organizational forms. This narrative provides a good starting point for innovation studies.
Schumpeter came out of the Austrian tradition of neoclassical economists, but also recognized that Marx (and the classical economists to a large extent) understood capitalist evolution as being driven by technological competition between firms. Schumpeter dedicated part one of Capitalism, Socialism and Democracy to Marx, which served as a prelude to his notion of creative destruction.
The narrative on technological competition (as opposed to price competition) is developed and criticized in the first two papers of the book and is then discussed in various contexts in various Essays.
One important theme developed in the book is interaction between innovation and imitation and the effects this has on economic growth.
Schumpeter wrote very little about this topic in 1911, but he had discussed them in his Business Cycles. He supposed that innovations are not evenly distributed through time but appear discontinuously in groups or swarms, engendering a cyclical pattern of development. Schumpeter then suggested that evolution proceeds by successive revolutions and that they followed a regular empirical pattern similar to the long-waves described by Nikolai Kondratiev.
Christopher Freeman later identified five successive technological revolutions, or techno-economic paradigms, dating from Arkwright’s first cotton mill to the current digital revolution. His narrative extends Schumpeter’s theory of long waves and technology, but differs from the concept of Industry 4.0 or The Fourth Industrial Revolution advocated by Klaus Schwab.
Freeman and the Science Policy Research Unit (SPRU) of the University of Sussex provided inspiration for Jan Fagerberg. In 1988, he completed his doctoral thesis on the role of technology, growth and trade from a Schumpeterian perspective. The sixth essay pays homage to Freeman’s contributions to innovation studies. An economist by training, he strongly believed in the interdisciplinarity of academic research. This vision is clearly reflected in the Selected Essays.
The technology gap approach to development and growth is developed further in the Selected Essays. This narrative starts from the premise that building social and technological capabilities are essential to closing the technology gap. Catching-up requires the development of new knowledge within the country as well as diffusing existing knowledge from outside of it. This involves developing the ability to identify, acquire, assimilate and exploit existing knowledge.
The essays provide an empirical framework based on Schumpeterian logic for analyzing competitiveness, based on technology, capacity, price and demand, across a wide range of countries. Technological learning and innovative behaviour appear important for countries both at and below the world technology frontier.
Innovation systems and Innovation policy
Innovation policy is considered in the final group of essays. Here the interaction between actors, organizations and institutions involved in innovation and diffusion becomes the central focus. Fagerberg has for a long time argued that innovation policies must be based on a systemic view of innovation, where innovation policy measures target the interplay between companies, knowledge institutions, public institutions within a given legal, social and institutional framework.
Based on reasoned history and a dynamic perspective, these papers focus on the co-evolution of policy, the research infrastructure and key sectors in the Norwegian, Nordic and European contexts. Ultimately, an effective innovation policy entails close coordination of policies across several different levels, including horizontal and vertical coordination between different levels of governance.
1 Technology, Growth and Competitiveness: Selected Essays, Edward Elgar 2002.
JAN FAGERBERG: INNOVATION, ECONOMIC DEVELOPMENT AND POLICY: SELECTED ESSAYS.
ISBN: 9781788110259 PAGES: 432
Hovedfoto: Professor Jan-Fagerberg og professor Bart Verspagen ved TIKs avslutningsfest for Fageberg. Foto: P-Koch