Select two approaches to innovation covered in different lectures.

• Present their similarities, differences and possible synthesis.
• What are the policy implications of each approach?
• Assess their validity distinguishing between core and peripheral countries.

Linear model impact on policy

A heavy focus on R&D

LINEAR MODEL APPROACH

In Business Cycles (1939), Joseph Schumpeter insisted that major waves of economic growth and technological transformation occurred in clusters of ‘radical innovations’ that depended on financial capital. A view that our very own Carlota Perez supported in her work on techno-economic revolutions. Stating that an ‘early upsurge of technology’ is often accompanied with a period of ‘explosive growth’ - and hence, investment.

If we apply this thinking using the linear model of innovation, the model guides us into believing that investment into basic and applied research - to generate scientific knowledge - will lead to the development of new innovations. This is a view that can very easily be compounded through the use of statistics in the model to measure innovation activity and track return of investment. Whilst this can be a simplistic and positive tool for policy makers to understand innovation activity - Essentially, it assumes - more patents - more innovation. Which does not consider the entire picture.

We believe that because the model doesn’t consider what Dosi called the ‘drivers of change’ or, more accurately, the ‘imperfect co-ordinating properties of the economic system’ - policies created through it’s lens will misallocate resources or investments into innovation activities. Fundamentally, these policies will look for economic growth through innovation but won’t consider the nature of innovation.

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The linear model of innovation focuses on technological innovations in isolation, assuming that each stage applies universally - regardless of the context it exists within.

It doesn’t account for the patterns of change within technological revolutions that Carlota Perez says lead to profound impacts on society, organisations and financial markets. This is events like:

• Reform and resistance: where each technological revolution initially brings new opportunities but can soon be perceived as a threat to established ways of doing things
• And a Mismatch and Social Costs: where Changes in the techno-economic sphere result in job losses, skill obsolescence, and geographic shifts, creating a significant social cost.

Because of this lack of consideration of the nature of growth in different sectors or countries the resulting policies are likely to be very limited in scope and not understand the broader impact it could have on the culture it is being implemented in.

This isolated ‘one-size-fits-all’ approach can mislead policy makers into thinking that innovation policies that have encouraged transformation in one country may be successful in another. It can have drastic impact on policies in periphery countries, particularly those influenced by dependency theory, as they look to develop independent strategies for local R&D, skill development and domestic growth they can’t simply copy and paste an approach, they need one that considers the socio-economic impact at a deeper level.

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