João Tavares & Verónica R. | Giovanni Dosi 13 Jan, 2:00 pm – 3:00 pm GMT Online LECTURE-2: The Economics of Technological Change by Dr. João Marcos Hausmann Tavares, Universidade Federal Fluminense, Brazil & Dr. Verónica Robert, CONICET - UNSAM, Argentina. CHAIR: Professor Giovanni Dosi, Institute of Economics Scuola Superiore Sant'Anna, Pisa. Moderator: Dr. Nanditha M.

1. The Economics of
Technological Change
and Selected Heterodox Schools of Economic
Thought
Tavares, J.M.H. (UFF/Brazil)
Robert, V. (CONICET-UNSAM/Argentina)

2. History and history of economic thought as a starting
point
- In the opening session of this lecture series, B-A Lundvall and Alan Freeman
highlighted the importance of deeper research on “reasoned history”. Nelson,
Dosi, Malerba and Perez among others also stressed the same point.
- The knowledge of both history and history of economic thought is key to a
better understanding of the present and the making of the future.
- The lecture we now introduce aims to develop a bit further our understanding
of the role played by contemporary evolutionary economics and innovation
system thinking within the broader history of economic thought.
- By doing this, the students will be better able to understand the potential and
scope of evolutionary literature, as well as its boundaries and limits.

3. Objectives of the Lecture
The objectives of the lecture are:
- to investigate the role played by innovation studies within major trends in the history of
economic thought
- to provide the audience tools to consistently articulate innovation literature with
macroeconomic and structuralist approaches
The target audience of the lecture is grad and master students, especially from the Global
South, that are interested in the frame of the innovation systems

4. Structure of the Presentation
1) Introduction: methodological challenges and purposes of studying economics
2) Key controversies and themes in the history of economic thought
3) Boundaries and complementarities of the research agendas on technological
change and effective demand
4) Boundaries and complementarities of the research agendas on technological
change and structuralism
5) Conclusions

5. On the role of innovation literature in economics:
overview and selected controversies
Classical Political Economy vs the
neoclassical paradigm:
- How is rent distributed?
- What is value and how is it
created?
The Keynesian revolution within the
neoclassical approach
- What are the causes of economic
growth? (Keynes, Harrod-Domar
and Kalecki)
- How do we explain
unemployment?
Schumpeter
- How do economic structures
change over time?
- What are the key aspects of
concurrence?
- What are the economic and
political causes behind
technological change?
Prebisch, C. Furtado and Latin
American Structuralism
- What are the structural specificities
of underdeveloped countries and
why do they matter?
- What is underdevelopment?
- How to deal with the external
constraint associated to
~1860
1936
1942
1949
Evolutionary and NSI
- Opening the black box of
innovation
- Critiques to neoclassical
microeconomics
fundamentals
- others… what is
innovation?
1970s
and 80s

6. Keynesian Revolution on economic growth and
unemployment
Keynes (and Kalecki) in one statement: we should not study only the capacity to
produce, but also the decision to use the production capacity.
- Effective Demand is a key aspect in defining why enterprises decide to use
their capacity to produce. Y = C + I + G + X - M
- The dual role of investment: demand side and supply side (new capacity to
produce).
Keynes in the long run: Harrod-Domar, Kalecki and demand-side determinants of
investment
- Why do enterprises invest? A long and important debate on the subject

7. On the complementarities and boundaries between
the research agendas opened by Schumpeter (1/2)
Schumpeter's role in explaining the economic change is unquestionable
Schumpeter (following his predecessors like Smith and Marx) opened new paths
to understand the technological change. This is a key aspect in determining:
- Quantitative side (growth): productivity and variations of capacity to produce
from new investments
- Qualitative side (structural change): what are the new goods and services that
we are able to produce?
- How do we produce and how do we acquire and develop new technological
skills, in the broad sense, that underneath the capacity to produce

8. On the complementarities and boundaries between
the research agendas opened Schumpeter (2/2)
As Philip Mirowski said, Schumpeter was “a living, breathing contradiction”
- A sharp distinction on the matter is advisable in order to avoid a neoclassical
resurgence from the neo-schumpeterian literature.
- Neo-schumpeterian should not distinguish themselves from neoclassical
literature only by a better explanation of nature and the causes of
technological change.
- But also how does “technology change” interact with the broader questions on
economics.

9. Structuralism and evolutionary theory:
complementarities and boundaries (1/2)
- Center-periphery approach
- Diffusion of technological change
- Sectors matters
- Cumulative causation
- Industrial policy
Structural specificites of developing countries: structural heterogeneity (dual
economy) and specialization leads to BOP constraints that are not easy to
overcome since technology is not diffused in periphery in the same way than in
the center (Cimoli & Porcile)

10. Structuralism and evolutionary theory:
complementarities and boundaries (2/2)
Structuralist thinking converges with Keynesian literature: Relevance of effective
demand although also states the problem of external constraint.
Necessity of structural change.
Schumpeterian literature provides a microdynamics story as well as institutional
framework that structuralism lacks.
- Why does technical progress not diffuse in the periphery like in the center?
- How does the lack of sectors that diffuse technical progress affect the good functioning of innovation
systems? (Failures in user-producer interactive learning) (Lundvall, Pavitt, Rosemberg)
- How do the state capability and the presence of power groups limit the possibility of applying
policies for structural change?

11. Conclusive remarks (1/2)
- Evolutionary and innovation system thinking are not the first in discussing change
in economics. There are several backgrounds. It is necessary to dialogue with
them.
- Evolutionary and innovation system thinking should be integrated with other
strands in economic thought in order to overcome their limits
- Evolutionary and innovation system thinking should not be about defending that
technology is very relevant, but to know where it is relevant and where it is not
- In order to do so, it is recommended to articulate heterodox traditions with deeper
focus on issues that are not the core of neo-schumpeterian research agenda
- Keynes: effective demand, growth and unemployment
- LA structuralism: historical and structural specificities of underdeveloped countries,specific
relationship with the world political and economic order, external constraint, power unbalance, states
and economic classes

12. Conclusive remarks (2/2)
1) Along our presentation we have talked a lot on technological change and its
direction, which is a key aspect of new evolutionary and innovation system
thinking. We should not expect that technological change, per se, will
indirectly solve our societal problems. Alternatively, policies for technological
change should be guided directly by the societal challenges of our countries.
2) The diversity of the challenges of the Global South: What are the current
societal, ambiental and economic challenges of the country in which you are?
3) A “reasoned” history and history of economic thought may help you
consistently identify some of the answers. But you will need deeper
autonomous and novel research on the specificities of the region in which you
are.

13. THANK YOU!!!
Tavares, J.M.H.
joaomht@gmail.com
Robert, V.
vrobert@gmail.com

14. Methodological challenges and Purposes of
Studying Economics
1) The importance to know where you are in history and in the history of
economic thought
a) The neo-schumpeterian literature and the neoclassical economics
b) The importance of buiilding bridges between the national system of innovation literature and
selected heterodox approaches
c) Theory to an appropriate understanding of history. “History” to a better understanding of
theory.
d) In the search of a “reasoned” history of economic thought: take this seriously.
2) The challenge of understanding a single object of study among a complex
network of economic relations
a) Of course that in a complex system, there are loops and feedbacks between different
economic variables. However, one shall not lose the sight from the main (and/or autonomous)
determinants of variable or another.
3) What are we talking about when we talk about the economy?

15. Classical Political Economy vs. the marginalist
Focus on change vs. coordination (Dosi)
Classical political economy: how value is created and distributed.
Accumulation
Development of productive forces
Value
Marginalist economics: allocation issues and assumption of scarce means.
Coordination, general equilibrium theory of prices.