Innovations
Innovations are inventions realized on the market
 Miscellaneous on Philosophy, Methodology and
Theories
 Schumpeter and Kondratieff
 R&D System
 Models of R&D System
 Geopolitics of Innovations
 R&D Policy
 National Systems of Innovation
 Research and Innovations in the EU and in its
Member Countries
Miscellaneous on Philosophy, Methodology and
Theories

Individuum and society
Structuration Theory

Joseph Alois Schumpeter (1883 – 1950)





Methodological liberalism
Enterpreneur disturbs stationary equilibrium
Inavoadable credit will be repaid from monopoly profit
Schumpeter´s real cycles theory
Credit and interest





Gemach
Sukuk and Islamic Banking
Aristotle (384BC – 322BC): economics x chrematistics
Thomas Aquinas (1225 – 1274): just price
Usury (loan sharking)
Schumpeter and Kondratieff (repetition)
Schumpeter and Kondratieff (repetition)

Three key elements of the development and
integration of new technology
1.
A nation must foster human creativity


Freedom and incentives to think about and experiment
with new ideas
Society must be open to change and willing to deal with
the disruptions in the status quo that the new technology
brings
Schumpeter and Kondratieff (repetition)
2. A well functioning capital market
3. Competitive environment that forces firms to
continually improve their products or risk being
forced out of business
Joseph Schumpeter in the early 1940s – The process of
creative destruction
 A successful economy must be adaptively efficient
 Perfect competition is not necessarily optimal for
creative destruction
 Complementarity of macro and micro inventions
 Institutions themselves cannot be stagnant

Schumpeter and Kondratieff
Industrial Revolution followed by successive
industrial revolutions (or long waves of
technical change)
 Successive industrial revolutions are based
on the qualitative transformation by new
technologies, they are not just simple
quantitative growth of individual industries.


Kondratieff 1925, Schumpeter 1939
Schumpeter and Kondratieff
R&D System
Repetition:
What is tied with the change to
Kuznetz pattern?
Adam Smith – improvements in machinery
come both from manufacturers and users of
machines and “natural philosophers”

R&D System

Professionalisation of innovative activities
Barely recognized at all in the 19th century
 Even the young Schumpeter (1912) stresses the
role of entrepreneurs, they are the source of
inventions, exogenous to the economy
 Schumpeter 1928 – recognizes the internalization
of much scientific and inventive activity within the
firm

R&D System
R&D
forms only a small proportion of
“information industries”, but it is in their
heart
STS – scientific and technological
services – link R&D with routine
production
R&D System
Distinctive
features of the modern R&D
Scale
Scientific
content
Professional specialization
Growing complexity of technology
Professional specialization brings problems
of communication with the “product line” and
of creation of a new social group, that follows
its interests and becomes a lobby

Models of the R&D
System
2 Sector Endogenous Growth Model
(covered in detail in the Advanced
Macroeconomics course)

1
Yt  [(1  a k ) K t ] [ At (1  a l ) Lt ]


At  B [ak K t ] [al Lt ] At

Models of the R&D
System

Socio-Cognitive Network
Cognitive
layer
Publications
Patents
Prototypes
Social
layer = Socio-economic network
Science
Development
Market
Models of the R&D System
Kognitivní (poznávací) vrstva
Publikace
Věda
Patenty
Prototypy
Vývoj
Sociální vrstva = technoekonomická síť
Trh
Geopolitics of Innovation
Is technological catching up or even
leap frogging possible? (In other words,
do emerging markets have a chance?)

Geopolitics of Innovation
Emerging markets are no more a good
label, it would be better to call them
upgrading markets. „The Economist“
stopped to use that label, all are just
markets.
 The phenomenon of BRICs (Brasil,
Russia, India, China)

Geopolitics of Innovation
For understanding the dynamics, we need
to know what Product Life Cycle is and what
is the need of resources in different phases of
the Product Life Cycle:

Phase
I – first introduction, definition of the
new product and its test on the market
Phase II – market growth, focus shifts to the
process of production
Geopolitics of Innovation
Phase
III – market size and growth are clearly
established, focus is now on managing the
growth of the firm and capturing of market share,
no time for new entrants
Phase
IV – maturity stage, both product
and its process of production are
standardized, firms reallocate their activities
to “cheaper” places or sell licences
Economics of Innovation
Geopolitics of Innovation

The easiest entry is in phases I and IV
Phase
I – little capital and experiences, high
scientific and technical knowledge, locational
advantage or compensatory help, high
innovation and imitation, entry does not
guarantee survival in the race
Phase IV – entry depends on traditional
comparative advantages and needs
investments + technology purchase funds
Geopolitics of Innovation
„The world turned upside down“
Special report of „The Economist“ on
innovations in emerging markets
 Do developed economies have a
chance?

R&D Policy
• „Laissez Innover“ or an R&D policy
(national goals and strategies)?
Public Spending x Specifying Targets for
Private Research
 Basic (Fundamental) Research x Applied
R&D

R&D Policy
Involvement of the public sector ought to be
tied to the industrial structure (if agriculture is
organized in family farms, government must
finance and organize agricultural research)

Empirically,
there is a couple of research
intensive industries with heavy government
involvement (aircraft, nuclear weapons..).
Importance changes in time, but lobbies make it
path dependent.
R&D Policy
The
problem of path-dependency does not
come from interest groups only – there is a
possibility of “lock-in” development in
locations selected earlier
“Lock-in” can be explained by feedbacks
among different actors in the socio-economic
network.
National Systems of Innovation
Historically,
there have been major
differences between countries in the
ways in which they have organized
and sustained the development,
introduction, improvement and
diffusion of new products and
processes within their national
economies
National Systems of Innovation
A
country’s success can be
attributed to a unique combination
of interacting social, economic and
technical changes within the
national economic space – and this
is called the National System of
Innovation
National Systems of Innovation
Differences
in economic
performance are due to varying
types of institutional and technical
change, which may be the subject
of qualitative description even
though difficult to quantify
Research and Innovations in the EU
and in its MCs
www.europa.eu (Policy Areas => Research and
Innovation)
www.vyzkum.cz
Research and Innovations in the EU and in
its MCs
Some Questions
What is the impact of globalization
on the EU system of innovation and
the MCs systems of innovation? How
is policy to react?
 What is the role played by the
multinational corporations? How is
policy to react?
 What is the role of regions?

Research and Innovations in the EU
and in its MCs
How can the flow of innovations be
improved?
 Could the people in the R&D sector be
employed elsewhere more effectively?
 Could the information required be
obtained free or at a lower cost from abroad?

Research and Innovations in the EU
and in its MCs
Are part time or amateur inventors sometimes
more productive than professionals?
 What kind of economies of scale are there in
the R&D?
 Can the gestation period for innovations be
shortened?
 What kind of firms are the most likely to
innovate and under what market conditions?

Research and Innovations in the EU
and in its MCs
What type of incentives stimulate innovation most
effectively?
 How are innovations diffused through the economy?
 What is the contribution of universities and how can
it be improved?
+
More fundamental questions about the relations of
innovations to more fundamental human values
