Technological complexity and financial increase of areas
Abstract
One the one hand, complex technology offer enormous
financial advantages, and on the alternative, they are difficult to invent and
to mimic, and they do not want a quick dissemination. This two-sidedness
motivates the idea that regions’ competitive blessings and, in result, their
financial boom, originate of their capability to supply and utilize complicated
technologies. However, the relationship among technological complexity and
regional monetary increase has rarely been empirically investigated. Here, we
deal with this pressing studies hole through assessing the complexity of
technological activities in 159 European NUTS 2 areas and pertaining to it to
their monetary growth from 2000 to 2014. Our empirical effects advise that
technological complexity is an essential predictor of nearby economic boom. A
10% boom in complexity is related to a 0.45% GDP in line with capita boom. By
displaying that technological complexity is crucial for local monetary
increase, our results fuel current policy debates about gold standard local
policies consisting of the Smart Specialization approach. @ Read More globaltechnologypc naturalbeautyblushes
Introduction
“I keep in mind wondering how comfy it become, this division
of labor which made it unnecessary for me to examine fogs, winds, tides, and
navigation, so one can go to my buddy who lived across an arm of the sea. It
turned into desirable that men need to be professionals […]. The ordinary
knowledge of the pilot and captain sufficed for lots hundreds of folks that
knew no greater of the ocean and navigation than I knew” (London, 1904).
Over 100 years in the past, Humphrey van Weyden praised the
blessings of specialization and division of hard work aboard a small vessel in
Jack London’s famous novel, “The Sea Wolf.” They allowed him to concentrate on
those matters that caught his hobby and skills. Besides their results on
character well-being, specialization and the division of labor increased
productiveness, generated economic surpluses and allowed for sustaining larger
populace sizes (Smith, 1776). The coordination and cooperation of professionals
to make use of the big quantities of various knowledge is less complicated in
larger and more densely populated regions (Becker and Murphy, 1992). In turn,
such larger and greater densely linked populations fuel in addition specialization
and division of hard work (Sveikauskas, 1975). This self-reinforcing method
improved the richness and complexity of knowledge production through the years
(Henrich, 2004, Kremer, 1993). Hence, one implicit effect of specialization and
division of exertions is the constantly increasing complexity of the arena’s
expertise (Aunger, 2010).
Knowledge, in popular, represents a crucial aid in these
days’s expertise financial system (Lucas, 1988, Romer, 1990). However, not all
know-how is alike and equally precious. More complicated knowledge is argued to
be a fundamental constructing block of aggressive benefit and monetary increase
(Hidalgo, Hausmann, 2009, Kogut, Zander, 1992). Its monetary relevance rests at
the concept that complex expertise is hard to imitate, and that handiest few
financial actors have the abilities to produce it (Storper, 2010).
Consequently, firms and economies with complex expertise are likely to earn
rents inside the form of better increase and wealth (Hidalgo, Hausmann, 2009,
Kogut, Zander, 1992, Teece, Pisano, Shuen, 1997).
Until now, empirical proof of the economic advantage of
know-how complexity is scarce and confined to monetary complexity as measured
via the product portfolio of an financial system (Bahar, Hausmann, Hidalgo,
2014, Hausmann, Hidalgo, Bustos, Coscia, Chung, Jiminez, Simoes, Yildirim,
2013, Hidalgo, Hausmann, 2009). Production, but, is handiest one size of
complexity, wherein understanding represents a crucial aid for building
competitive advantage. Technological understanding is complementary and in
addition crucial for economies’ competitiveness and increase (Lucas, 1988,
Nelson, Winter, 1982, Romer, 1990). Yet, the relation between technological
complexity and economic increase remains unexplored.
In this newsletter, we address this research hole by means
of reading the connection among technological complexity and economic increase
at the extent of 159 European NUTS 2 areas between 2000 and 2014. We
approximate technological activities by way of counting on patent files , and
determine technological complexity with the lately developed measure of
Structural Diversity (Broekel, 2019). The consequences of dynamic panel
regressions verify that technological complexity is a high-quality and strong
predictor of financial boom in European regions.
Our observe is established as follows. Section 2 provides an
outline of the theoretical and empirical literature on technological
complexity. Section three gives the empirical records and our estimation
technique. The empirical effects are offered in Section 4. Based on our
findings, Section five concludes that technological complexity can be
considered an important size of regional expertise manufacturing able to
informing current coverage programs which includes the Smart Specialization
method of the European Union.
Section snippets
Theoretical historical past and literature assessment
Knowledge manufacturing is a essential source of
lengthy-time period financial growth (Aghion, Howitt, 1998, Grossman, Helpman,
1991, Kuznets, 1962, Nelson, Winter, 1982, Romer, 1990), which helps in
understanding the uneven increase patterns of areas (Fagerberg, Verspagen,
Caniëls, 1997, Glaeser, Kallal, Scheinkman, 1992, Henderson, Shalizi, Venables,
2001). Knowledge accumulates through the years in - and adheres to - sure
locations, leading to a robust spatial concentration of know-how in regions (
Materials and methods
Our unit of evaluation are NUTS 2 areas in Europe, for which
we collected a rich set of variables among 2000 and 2014. We chose NUTS 2 areas
normally for motives of facts availability. Clearly, functional areas inclusive
of local hard work markets would be greater suitable to seize the regional
measurement of innovation processes. However, there's no common definition across
Europe, and many empirical variables aren't to be had at other levels. The very
last pattern is composed of 159 specific areas
Complexity and regional growth
All outcomes provided in this phase are based totally on
complexity being envisioned with respect to the 10th percentile. That is, a
location’s technological complexity corresponds to the mean Structural
Diversity of its technological activities with the ten% maximum values.
Notably, our consequences are very robust with appreciate to the choice of this
parameter (see Section 4.2). We additionally restricted our analysis to regions
with at the least seventy five patents consistent with year. This threshold is
vital to provide dependable
Conclusion
In this article, we analyzed the contribution of
technological complexity to regions’ monetary boom. Using data on European
areas and more than a few empirical specifications, we showed that differences
within the functionality to supply and make the most complicated technologies
give an explanation for versions in areas’ economic increase. These findings
underpin the argument that complexity is an critical constructing block of
aggressive gain (Hidalgo, Hausmann, 2009, Kogut, Zander, 1992).
However, there are some of
CRediT authorship contribution announcement
Lars Mewes: Conceptualization, Methodology, Data curation,
Formal evaluation, Visualization, Writing - review & modifying. Tom
Broekel: Conceptualization, Methodology, Formal analysis, Writing - overview
& enhancing, Funding acquisition.
Declaration of Competing Interest
The authors declare that they have no regarded competing
economic interests or personal relationships that might have seemed to
influence the paintings reported in this paper.
Acknowledgments
We thank the editor Elisa Giuliani and anonymous reviewers whose feedback and
pointers helped improve this manuscript.
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