Technological regime and technological catch up in

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Technological regime and technological catch up in resource based industries:

Case study of oil and gas industry using patent data

A methodological discussion by:

Ali Maleki

Institute for study of science, technology and innovation

Edinburgh University

Outline

Motivation and background

Theoretical background

Research questions

Analytical framework

Research methodology

Motivation and background

Natural resources and economic growth

Resource curse thesis

Lower rate of economic growth

Dutch disease, political conflicts, corruption and war

Technology and economic growth

New growth theory

Evolutionary theory of economic change

Knowledge based economy

Technology, knowledge and economic growth in resource based industries and countries: An unexplored research area???

Exhaustibility of resources and sustainability of technology and innovation capabilities

Global economy and changing terms of trade

Global value chains and division of innovative labour

A growing research agenda

Observations, and broad questions

Empirical observations

Diverse range of historical and recent examples

Success: US, Norway, Scotland, Botswana, Chile

Failure: Nigeria, Angola,

Middle range: Iran, Algeria, Saudi Arabia

Broad questions in this emerging area

Why and how a handful of countries did manage to technologically catch up in oil and gas industry while many others did not? What is the role of technological underpinning of the industry

The knowledge and technology in resource based indutries

Some cases studies

Lack of general understanding of major driving or blocking factors for technological catch up at industry level

Research Questions

To what extent (if any ) resource based industries does the potential for innovative knowledge and technology based development?

Exploring the technological diversity of the value chain of upstream oil and gas industry and its spill over potential effects

To what extent (if any) technological regimes in resource based industries could explain patterns of technological catch up by latecomers to this global industry ?

Patterns of technological catch up

Occurrence and speed of technological catch up by country

Role of different types of actors during catch up process.

Role of knowledge spillovers from forerunners

Point and degree of vertical integration in the value chain

Different dimensions of technological regime of the industry

How may the local sectoral systems of innovation facilitate or obscure the technological catching processes when technological regimes allow for that to happen?

The nature of demand

The role of policy

Literature Review

Catching up: Sectoral and technological

Explaining catching up processes

Mostly based on the experience of NICs in East Asia (Resource poor)

Mostly based on new high tech industries such as ICT

Technological regimes

– the particular knowledge environment where firm problem-solving activities take place : similar for the firms operating in the same market

Developed to explain different patterns of innovation across firms and industries: ex. entrepreneurial vs. cumulative

They may impose constraint on the pattern of innovation emerging in an industry

TR across countries

In the same TR, patterns of innovation is expected to be invariant across countries.

But, exploiting opportunities is less similar among countries

Country specific patterns of innovation

Technological Regimes and catching up

“Malerba and Orsenigo have also acknowledged that there may be country-specific patterns of innovation. And these are related to the existence of the major difference between countries in their historical industrial development, in the competence and organization of their firms, and in the architecture and policies of their specific national innovation.

Malerba and Orsenigo argued that technological imperatives and technology-related factors such as technological regimes play a major role in determining the specific pattern of innovative activities of a technological class across countries and that within these major constraints identified by technological regimes country-specific factors introduce differences across countries in the pattern of innovative activities for specific technological classes.” (Park & Lee, 2006)

Under certain Technological Regimes catching up behavior is expected more than others.

Ex. : Less cumulativeness and more predictable TR, catching up is more likely

Grand Hypothesis: TR matters for Technological catching up.

Ex. Leapfrogging argument (Preze and Soete, 1998)

Established factors of Technological regimes

As a particular combination of four key factors

Technological opportunities

’ conditions may depend on the extent to which a technological sector can draw from the knowledge base, the technological advances of its suppliers and customers, and major scientific advances in universities.

Appropriability

: patents, secrecy, lead times, costs and time required for duplication, learning curve effects, superior sales efforts, and differential technical efficiency due to scale economies

Cumulativeness:

The degree to which the development of new knowledge are based on the accumulation and mastery of old knowledge from the cognitive perspective

Knowledge base properties: independence

Specificity, tacitness, complementarily, and

Catching up related dimensions of TR

Different from the standard dimensions

Relative technological cycle time (speed of obsolescence of knowledge).

Technological cycle time is measured by the time span between the predecessor and the successor and is calculated as the time difference between the application year of the citing patent and that of the cited patents, to be normalized for inter class comparisons.

Accessibility to external knowledge flows

Access to the knowledge base, or spillovers from the core, is here measured by the proportion of citations by catching up countries to forerunners countries’ patents out of total citations in a class

Catching up related dimensions of TR

(Cont.)

Initial stock of accumulated knowledge

– considering the situation of catching-up economies, the knowledge gap with advanced countries for every technological sector must also be addressed. The larger the gap, the more difficult it is to catch-up

The measure of this variable is the total number of the patents in each class normalized by the total number of the patents in all classes of the industry

Uncertainty (fluidity) of a technological trajectory

In the technologies at their early stages, it is difficult to predict how the technologies will evolve in the future, and we can say that the level of uncertainty is greater

Uncertainty of class i = (Maxi – Mini)/AVGi for each class i,

– where Maxi is the number of patents in a class i in the year when largest number of patents were recorded during a given period, Mini the number of patents in a class i in the year when the smallest number of patents were recorded during the given period, and AVGi the average number of patents in a class i per year during that period.

Sectoral systems of innovation

Structure of the value chain

Operators ( IOCs and independents)

Integrated service companies

Supply and Service companies

Nature of the industry

Global value chains and global sourcing and user of diverse range of technologies

Structural change in 1970s

Highly politicized industry

Different levels of technological capabilities in catching up countries

Ownership (legal Dealing with the owner of the technology)

Production: System Integration

Operation ( of installed integrated technology)

Development ( Application and integration of the others ‘technology)

Service and Supply

Production of good and services

Innovation

A typology in local systems of innovation

Knowledge intensity

Knowledge intensity

Knowledge intensity

Resource intensity

1-Contradication

Resource intensity

2-Co- existence

Resource intensity

3-Co-evolution

The role of user producer interaction and risks of technological catch up

Even in enabling technological regimes, technological catch up would not occur unless an enabling local systems of innovation provides complementary assets and reduce the risks of innovation processes

Two main risks associated for technological catch up by latecomers (Lee et al., 2005).

The risk of choosing right technology which is function of technological regimes

– of initial market to commercialize it

For catching up ‘collective dynamic risk’ produced by the inter-dependence of risks associated with different players in the system matter.

Example of collective dynamic risk in user producer interactions in upstream oil and gas industry: An enclave type industry

Higher degree of risks in Cops types industries

Research Methodology

Quantitative

Identification of related patents

Keyword based strategies

Correspondence tables

Current indexing systems: Derwent

Measures of patterns of technological catch up

Patent counts, relative shares

Occurrence and speed in lifecycle of industry catch up

Patterns of classes

Patterns of actors

Value chain and degree of vertical integration in innovation

Measures of dimensions of technological regimes

Regression analysis

Qualitative

Secondry data and literature

Interviews with key informants of the industry

Patent Data

Derwent class and Manual codes based on the value chain

H: PETROLEUM

H01 CRUDE OIL AND NATURAL GAS

H01-A EXPLORATION

H01-B DRILLING

H01-C WELL COMPLETION, STIMULATING, AND SERVICING

H01-D PRODUCING

H01-E TREATING AND TESTING

H01-F NATURAL GAS

H01-G EXTINGUISHING OIL WELL FIRES

H01-H WELL KILLING

H01-P OIL AND GAS WELL PIPES

H01-R DEPLETED OIL/GAS FIELDS

H02, ….. Downstream

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