Innovations Innovations are inventions realized on the market Miscellaneous on Philosophy, Methodology and Theories Miscellaneous on Philosophy, Methodology

InnovationInnovationssInnovations are inventions realized on Innovations are inventions realized on

the marketthe market Miscellaneous on Philosophy, Miscellaneous on Philosophy, Methodology and TheoriesMethodology and Theories Schumpeter and KondratieffSchumpeter and Kondratieff RR&D &D SystemSystem Models of RModels of R&D &D SystemSystem Geopolitics of InnovationsGeopolitics of Innovations RR&D &D Policy Policy National Systems of InnovationNational Systems of Innovation Research and Innovations in the EU Research and Innovations in the EU and in its Member Countriesand in its Member Countries

Miscellaneous on Philosophy, Miscellaneous on Philosophy, Methodology and TheoriesMethodology and Theories

Individuum and society Individuum and society Structuration TheoryStructuration Theory Joseph Alois Schumpeter (1883 – 1950)Joseph Alois Schumpeter (1883 – 1950) Methodological liberalismMethodological liberalism Enterpreneur disturbs stationary equilibriumEnterpreneur disturbs stationary equilibrium Inavoadable credit will be repaid from monopoly profitInavoadable credit will be repaid from monopoly profit Schumpeter´s real cycles theorySchumpeter´s real cycles theory Credit and interestCredit and interest GemachGemach Sukuk and Islamic BankingSukuk and Islamic Banking Aristotle (384BC – 322BC): economics x chrematisticsAristotle (384BC – 322BC): economics x chrematistics Thomas Aquinas (1225 – 1274): just priceThomas Aquinas (1225 – 1274): just price Usury (loan sharking)Usury (loan sharking)

Schumpeter and Kondratieff Schumpeter and Kondratieff (repetition)(repetition)


Three key elements of the Three key elements of the development and integration of new development and integration of new technologytechnology

1.1. A nation must foster human creativityA nation must foster human creativity Freedom and incentives to think about and Freedom and incentives to think about and

experiment with new ideasexperiment with new ideas Society must be open to change and Society must be open to change and

willing to deal with the disruptions in the willing to deal with the disruptions in the status quo that the new technology bringsstatus quo that the new technology brings


2. A well functioning capital market2. A well functioning capital market

3. Competitive environment that forces 3. Competitive environment that forces firms to continually improve their products firms to continually improve their products or risk being forced out of businessor risk being forced out of business

Joseph Schumpeter in the early 1940s – The Joseph Schumpeter in the early 1940s – The process of creative destructionprocess of creative destruction

A successful economy must be adaptively A successful economy must be adaptively efficientefficient

Perfect competition is not necessarily optimal Perfect competition is not necessarily optimal for creative destructionfor creative destruction

Complementarity of macro and micro Complementarity of macro and micro inventionsinventions

Institutions themselves cannot be stagnantInstitutions themselves cannot be stagnant

Schumpeter and Schumpeter and KondratieffKondratieff

Industrial Revolution followed by Industrial Revolution followed by successive industrial revolutions successive industrial revolutions (or long waves of technical change)(or long waves of technical change) Successive industrial revolutions Successive industrial revolutions are based on the qualitative are based on the qualitative transformation by new transformation by new technologies, they are not just technologies, they are not just simple quantitative growth of simple quantitative growth of individual industries.individual industries. Kondratieff 1925, Schumpeter Kondratieff 1925, Schumpeter 19391939

Schumpeter and Schumpeter and KondratieffKondratieff

R&D R&D SSystemystemRepetition: What is tied with the Repetition: What is tied with the change to Kuznetz pattern?change to Kuznetz pattern?

Adam Smith – improvements in Adam Smith – improvements in machinery come both from machinery come both from manufacturers and users of manufacturers and users of machines and “natural machines and “natural philosophers”philosophers”

R&D R&D SSystemystem Professionalisation of innovative Professionalisation of innovative activitiesactivities

Barely recognized at all in the 19Barely recognized at all in the 19thth centurycentury Even the young Schumpeter (1912) Even the young Schumpeter (1912) stresses the role of entrepreneurs, they stresses the role of entrepreneurs, they are the source of inventions, exogenous are the source of inventions, exogenous to the economyto the economy Schumpeter 1928 – recognizes the Schumpeter 1928 – recognizes the internalization of much scientific and internalization of much scientific and inventive activity within the firminventive activity within the firm

R&D R&D SSystemystemR&D forms only a small R&D forms only a small proportion of “information proportion of “information industries”, but it is in their industries”, but it is in their heartheartSTS – scientific and STS – scientific and technological services – link technological services – link R&D with routine productionR&D with routine production

R&D R&D SSystemystemDistinctive features of the modern Distinctive features of the modern R&D R&D

ScaleScaleScientific contentScientific contentProfessional specializationProfessional specializationGrowing complexity of technologyGrowing complexity of technology

Professional specialization brings Professional specialization brings problems of communication with problems of communication with the “product line” and of creation the “product line” and of creation of a new social group, that follows of a new social group, that follows its interests and becomes a lobbyits interests and becomes a lobby

Models of the Models of the R&D R&D SSystemystem

2 Sector Endogenous Growth 2 Sector Endogenous Growth Model (covered in detail in the Model (covered in detail in the Advanced Macroeconomics Advanced Macroeconomics course) course) 1])1([])1[( tlttkt LaAKaY

A B a K aL At k t l t t [ ] [ ]


Socio-Cognitive NetworkSocio-Cognitive NetworkCognitive layerCognitive layer

PublicationsPublicationsPatentsPatentsPrototypesPrototypes

Social layer = Socio-economic networkSocial layer = Socio-economic networkScienceScienceDevelopmentDevelopmentMarketMarket


Publikace Patenty Prototypy

Věda Vývoj Trh

Sociá ln í vrstva = technoekonom ická síť

Kognitivní (poznávací) vrstva

GeopoliticsGeopolitics of of InnovationInnovation

Is technological catching up Is technological catching up or even leap frogging possible?or even leap frogging possible? (In other words, do emerging (In other words, do emerging markets have a chance?)markets have a chance?)


Emerging markets are no Emerging markets are no more a good label, it would be more a good label, it would be better to call them upgrading better to call them upgrading markets. „The Economist“ markets. „The Economist“ stopped to use that label, all stopped to use that label, all are just markets.are just markets. The phenomenon of BRICs The phenomenon of BRICs (Brasil, Russia, India, China)(Brasil, Russia, India, China)


For understanding the dynamics, For understanding the dynamics, we need to know what Product we need to know what Product Life Cycle is and what is the need Life Cycle is and what is the need of resources in different phases of of resources in different phases of the Product Life Cycle: the Product Life Cycle:

Phase I – first introduction, Phase I – first introduction, definition of the new product and its definition of the new product and its test on the markettest on the marketPhase II – market growth, focus Phase II – market growth, focus shifts to the process of productionshifts to the process of production


Phase III – market size and growth Phase III – market size and growth are clearly established, focus is now are clearly established, focus is now on managing the growth of the firm on managing the growth of the firm and capturing of market share, no and capturing of market share, no time for new entrantstime for new entrantsPhase IV – maturity stage, both Phase IV – maturity stage, both product and its process of product and its process of production are standardized, production are standardized, firms reallocate their activities to firms reallocate their activities to “cheaper” places or sell licences“cheaper” places or sell licences

Economics of Economics of InnovationInnovation

GeopolitiGeopolitics of cs of InnovationInnovation

The easiest The easiest entry entry is inis in phases phases I and IVI and IV

Phase I – little capital and Phase I – little capital and experiences, high scientific and experiences, high scientific and technical knowledge, locational technical knowledge, locational advantage or compensatory help, advantage or compensatory help, high innovation and imitation, high innovation and imitation, entry does not guarantee entry does not guarantee survival survival in the racein the racePhase IV – entry depends on Phase IV – entry depends on traditional comparative advantages traditional comparative advantages and needs investments + and needs investments + technology purchase fundstechnology purchase funds

GeopolitiGeopolitics of cs of InnovationInnovation

„ „The world turned upside The world turned upside down“ Special report of „The down“ Special report of „The Economist“ on innovations in Economist“ on innovations in emerging markets emerging markets Do developed economies have Do developed economies have a chance?a chance?

RR&D &D PolicyPolicy

• „ „LLaissez aissez IInnovernnover““ or or aann R&D R&D policy (national goals and policy (national goals and strategies)strategies)??

Public Public SSpending x pending x SSpecifying pecifying TTargetsargets for Private Research for Private Research BBasicasic (Fundamental) (Fundamental) RResearch esearch x x Applied Applied R&D R&D

RR&D &D PolicyPolicy Involvement Involvement ofof the public sector the public sector ought to be tied to the industrial ought to be tied to the industrial structure (if agriculturestructure (if agriculture is is organized organized in family farms, government must in family farms, government must finance and organize agricultural finance and organize agricultural research)research)

Empirically, Empirically, there is there is a couple of a couple of research intensive industries with research intensive industries with heavy government involvement heavy government involvement (aircraft, nuclear weapons..). (aircraft, nuclear weapons..). Importance changes in time, Importance changes in time, butbut lobbieslobbies make it path dependent. make it path dependent.

RR&D &D PolicyPolicyThe problem of The problem of path-dependen path-dependency cy does not come from interest groups does not come from interest groups onlyonly – – there is a there is a possibility of “lock-possibility of “lock-in” development in locations in” development in locations selected earlierselected earlier““Lock-in” can be explained by Lock-in” can be explained by feedbacks among different feedbacks among different actors in actors in the socio-economic network.the socio-economic network.

National Systems of National Systems of InnovationInnovation

Historically, there have Historically, there have been major differences been major differences between countries in the between countries in the ways in which they have ways in which they have organized and sustained the organized and sustained the development, introduction, development, introduction, improvement and diffusion improvement and diffusion of new products and of new products and processes within their processes within their national economiesnational economies


A country’s success can A country’s success can be attributed to a unique be attributed to a unique combination of combination of interacting social, interacting social, economic and technical economic and technical changes within the changes within the national economic space – national economic space – and this is called the and this is called the National System of National System of InnovationInnovation


Differences in economic Differences in economic performance are due to performance are due to varying types of varying types of institutional and institutional and technical change, which technical change, which may be the subject of may be the subject of qualitative description qualitative description even though difficult to even though difficult to quantifyquantify

Research and Innovations in Research and Innovations in the EU and in its MCsthe EU and in its MCs

www.europa.eu (Policy Areas www.europa.eu (Policy Areas => => Research and Innovation)Research and Innovation)

www.vyzkum.cz www.vyzkum.cz

Research and Innovations in the Research and Innovations in the EU and in its MCsEU and in its MCs

Some Some QuestionsQuestions What is the impact of What is the impact of globalization on the globalization on the EUEU system of innovationsystem of innovation and the and the MCs systems of innovationMCs systems of innovation?? How is policy to react?How is policy to react? What is the role played by What is the role played by the the multimultinational national corporations?corporations? How is policy How is policy to react?to react? What is the role of What is the role of regions?regions?


How can the flow of innovations How can the flow of innovations be improved?be improved? Could the people in the R&D Could the people in the R&D sector be employed elsewhere sector be employed elsewhere more effectively?more effectively? Could the information required Could the information required be obtained free or at a lower cost be obtained free or at a lower cost from abroad?from abroad?


Are part time or amateur inventors Are part time or amateur inventors sometimes more productive than sometimes more productive than professionals?professionals? What kind of economies of scale What kind of economies of scale are there in the R&D?are there in the R&D? Can the gestation period for Can the gestation period for innovations be shortened?innovations be shortened? What kind of firms are the most What kind of firms are the most likely to innovate and under what likely to innovate and under what market conditions?market conditions?


What type of incentives stimulate What type of incentives stimulate innovation most effectively?innovation most effectively? How are innovations diffused through How are innovations diffused through the economy?the economy? What is the contribution of universities What is the contribution of universities and how can it be improved?and how can it be improved?

++More fundamental questions about the More fundamental questions about the relations of innovations to more relations of innovations to more fundamental human valuesfundamental human values

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Innovations Innovations are inventions realized on the market Miscellaneous on Philosophy, Methodology and Theories Miscellaneous on Philosophy, Methodology